June 8, 2009 8:22 pm

Boots job will leave Hornby well-heeled

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Andy Hornby, former chief executive of HBOS, could be paid about £800,000 ($1.2m) a year in his new role as chief executive of Alliance Boots.

People familiar with the situation said Mr Hornby, who was confirmed as group chief executive of the private-equity owned retail and drugs distribution group on Monday, would be paid a basic salary of about £400,000, rising to about £800,000 including annual bonus.

This would be in line with the remuneration of Ornella Barra, who leads the wholesale pharmaceuticals division, and Alex Gourlay, chief executive of the health and beauty division.

Stefano Pessina, executive chairman, teamed up with Kohlberg Kravis Roberts to take Alliance Boots private in Europe’s biggest buy-out two years ago.

Mr Hornby, whose reputation was badly damaged when HBOS came to near collapse last year, will also join the so-called management equity plan.

Like more than 100 other senior managers across the group, he will invest his own money in “sweet equity” – ordinary shares that can pay out big profits if the company is sold for a profit, but suffer the first loss if it fails.

A person familiar with Alliance Boots said of Mr Hornby’s appointment: “We have taken on the potential PR impact of this. But we think he is a world class chief executive. He perhaps didn’t play a perfect hand at HBOS, but he deserves a second chance.”

He added: “We would rather go for the best, even with baggage, than settle for a safe pair of hands without any baggage.”

Mr Hornby’s experience of running a FTSE 100 company could prove handy for Alliance Boots, which KKR and Mr Pessina plan to float when markets recover.

Alliance Boots said that Mr Hornby would become group chief executive on July 1.

www.ft.com/lombard

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