Public companies are likely to follow the lead of retailer Next and help senior management ‘bet’ on their future share price, the solicitor who advised on the fashion group’s innovative executive incentive scheme has said.

Under the deal, Next’s executive directors and other senior employees have effectively placed a bet on the company’s share price in 2008.


If the retailer’s share price is £20 or less in four year’s time, they will lose their initial outlay. If it is above £20, the scheme will pay out with management able to achieve a return of up to five times their initial investment. The maximum payout will be applicable if the share price is at or above £24.50.


When the scheme was announced last month, Next’s share price stood at £15.04. Some of Next’s executives were paid a special bonus to be able to take part in the scheme.


Chris Wilkinson, a corporate partner at City firm Simmons & Simmons who advised on the plan, said: ‘It is one of those few schemes that does align shareholders’ interests with management interests.


‘In the retail sector, a lot of major companies are private and are able to offer significant incentives. Public companies have shareholders to answer to and the opportunity to provide those sorts of incentives are more restricted.’