Sunday 25 September 2016

Stanley brothers and McIntosh in line for big payout at Cairn Homes

Published 03/04/2016 | 02:30

Bosses at listed housebuilder Cairn Homes are in line for a big payout under a
Bosses at listed housebuilder Cairn Homes are in line for a big payout under a "founders' shares" incentive scheme set up by the company

Bosses at listed housebuilder Cairn Homes are in line for a big payout under a "founders' shares" incentive scheme set up by the company.

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Cairn shares have closed over 112.5c for more than 15 consecutive days this month, meaning that the performance condition for the payout has been met.

The scheme runs over seven years, and the men are only entitled to a payout if the company achieves a 12.5pc increase in total shareholder return (encompassing share price rises and dividends), calculated in a test period each year on a compound basis. The IPO price was €1.

Under the scheme, the holders of founders' shares, chief executive Michael Stanley, executive director Alan McIntosh, and chief commercial officer Kevin Stanley, are entitled to 20pc of the total increase in the company's market capitalisation since its IPO, with the increase calculated from a test period running from March 1 to June 30.

They will receive the payout in the form of Cairn shares, and it will be split on a pro-rata basis - 50pc to McIntosh, 35pc to Michael Stanley, and 15pc to Kevin Stanley - based on the amount of founders' shares each man owns. That means that if the company's market cap were to increase by €100m since the IPO, the men would get €20m of shares split three ways. However, all the shares they receive will be a subject to a one-year lock-up period - meaning they can't be sold - and 50pc of the shares have a two-year lock-up period,

A spokesperson for Cairn Homes said the scheme was agreed with key investors, adding that the founders had contributed around €29m of assets at cost to the company and that the structure recognises the value contributed to the company by the founders at day one, but not taken by them prior to the IPO. The founders also invested €10m in cash on the same terms as the investors.

The company was in the news two weeks ago after raising €170m via a share placing that is subject to shareholder approval. It has been hoovering up land for housebuilding.

A number of assets were bought by the company from Michael Stanley and Alan McIntosh. Cairn Homes Holdings Limited, owned by an entity whose beneficial owners are McIntosh and his spouse, and another entity of which Michael Stanley and some of his family members own more than 96pc of the beneficial interest, was acquired for €26.7m, paid for with shares.

A business park in Artane, Dublin 5, and development land in Galway and Killiney in south Dublin was bought from other McIntosh entities for around €20m in cash.

In addition, the company bought an €18.1m loan due to a McIntosh entity, which was paid off in full with interest of €3.6m.

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