LUQMAN ARNOLD, the chief executive of Abbey National, will make £5.1 million under the terms of Banco Santander Central Hispano’s agreed £8.5 billion takeover.
The payout, comprising £3.5 million in share options and £1.6 million in lieu of his one-year contract, will take Mr Arnold’s package for his two-and-half-year stint at Abbey to about £8.8 million.
He is staying on until the middle of next year to oversee the integration.
Documents due to be sent to Abbey shareholders show that the bank’s seven directors will share a £10.2 million options bonanza if, as expected, the Santander bid is waved through by shareholders.
Stephen Hester, Abbey’s chief operating officer who joined Abbey shortly before Mr Arnold, will make more than £2 million from his options. Mr Hester, however, will not receive a payoff, as he agreed to become chief executive of British Land, before the Spanish deal was struck.
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Lord Burns, Abbey’s chairman, will also be handsomely rewarded. Although he holds no share options, and is to retain an advisory role, the deal states he will receive a payoff of £465,750 — a year’s salary — if he leaves before the end of June 2005.
Mark Pain, who was finance director before Mr Hester, and part of the management team that oversaw the bank’s £1 billion loss, will make £1.1 million in options.
Angus Porter, the director who was responsible for Abbey’s controversial £11 million redesign, will make £907,000. Yasmin Jetha, the director in charge of IT, will make £1.1 million.
A spokeswoman for Abbey said that awards were justified. She said: “The board did not set out to sell the company.” She pointed out that the takeover price of 576p share, was 80 per cent above the low the shares reached as the extent of its foray into high-risk investments unwound.
The National Association of Pension Funds, representing institutional investors, said the Abbey board had “done a good job” in turning round the company and selling it. The shareholder documents reveal some of the perks enjoyed by Santander’s board. Alfredo Saenz Abad, a Santander director, has accrued pensions of €52 million (£35 million), while fellow board member Matias Rodriguez Inciarte has a pension pot of €27 million.
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Investment bankers will also reap rich pickings in the takeover — the biggest in Britain this year. The two banks will pay about €179 million in fees.
Abbey will shell out about €90 million to its team of advisers which include the investment bank Morgan Stanley, and Slaughter and May, the law firm. The costs also include printing and postage, and the hire of London’s Wembley Conference Centre, where investors will vote.
Santander will pay about €89 million in total. Its advisers include Merrill Lynch, Goldman Sachs and JP Morgan, and lawyers Uria & Menendez. The costs include the setting up of a free share dealing service that will allow British investors to sell their shares for six months from completion.
The fees depend on the deal, due to complete in November, going through.
Rival UK lender HBOS cleared the way for victory for Santander by pulling out of the running for Abbey on Wednesday.
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Neither bank would give more details.