The retail entrepreneur Philip Green has banked £1.2bn after awarding himself the biggest pay cheque in British corporate history. The huge dividend has come from the Arcadia fashion business, which has 2,000 outlets and spans high street names including Top Shop, Wallis and Burton. It is more than four times the group's pre-tax profits of £253m.
The billionaire revealed a £1.3bn payout yesterday as he unveiled Arcadia's annual results. Mr Green owns 92% of the business and will therefore receive £1.17bn. The balance will go to the banking group HBOS, which bankrolled his purchase of the business for £850m three years ago and owns 8% of the shares.
The entrepreneur's payday is nearly £100m more than the previous record. Last year the steel tycoon Lakshmi Mittal paid himself a £1.1bn bonus after merging his two businesses, Ispat International and LNM Holdings.
Mr Green's £1.2bn will not be taxed as it will be paid to his wife, Tina, who lives in Monaco. Mrs Green is the direct owner of Arcadia.
The huge payout is bound to fuel speculation that Mr Green still harbours ambitions to buy Marks & Spencer. He tried and failed to acquire M&S last year, indicating that he was ready to pay £10bn. Mr and Mrs Green's combined wealth is estimated at nearly £5bn and at the time of the M&S bid Mr Green was willing to put up £1bn of his own money.
Marks & Spencer shares closed up 4.5p at 402p yesterday, breaching Mr Green's suggested bid price for the first time and marking their highest level since May 2002. However, Mr Green said last night that he had no plans for the money.
The cash will be coming from a seven and a half year loan to Arcadia. "It is senior debt, not rinky-dinky funny money. It is plain vanilla, not chocolate or raspberry," said the tycoon, who also owns Bhs. "It is affordable and it is not over-aggressive. It leaves the business with plenty of opportunities to grow.
"If this was venture capitalists, they'd be taking twice this number," he added. "In every business we've ever bought, we haven't sold and leased back all the assets, we've kept them all. We haven't ratcheted the business off the roof."
The £1.3bn payout includes a £460m dividend Mr Green announced last year but did not pay. A spokesman said the loan was easily affordable, with the interest covered "seven or eight times".
The Arcadia Group's full-year results to August 27 showed a 10% rise in operating profits to £326m. Total sales were ahead 6.8% at £1.8bn and like-for-like sales were up 1.3%. Operating margins climbed 0.5% to an impressive 18.4%. The net cash generated rose from £364m a year ago to £404m due to better stock control and the speed at which products reach stores. Mr Green paid back the cash he borrowed to buy Arcadia within two years and after taking out the loan to fund his payout Arcadia's debt stands at £1.3bn.
He opened 95 new stores last year, including those acquired with the purchase of the Etam chain. He said he intended to open another 48 this year, creating 1,400 jobs. He described the figures as "an excellent set of results" and praised the contribution made by his staff. A "multimillion-pound bonus pot" had been set up to reward their efforts.
Four of his Arcadia chains - Top Shop, Wallis, Evans and Burton - had a record year. Miss Selfridge, he said, had shown a small improvement while the contribution from Dorothy Perkins and Burton had declined slightly.
Mr Green said he was not unduly concerned about the two underperforming chains: "We are never going to get everything all right. I am not focused on any one brand. It's great to have a premier brand [Topshop] but all the teams work very hard. It's like having seven children: you have to treat them all the same, you can't have favourites."
The entrepreneur said trading performance since the year-end had declined slightly but he insisted that was down to the recent warm weather: "It was 24 degrees last week. Seasonal product has slowed up because of the unseasonal weather. Even I can't sell ice to eskimos."