So-called private equity-style pay deals are coming to Mitchells & Butlers (M&B). In a further sign of the changes wrought by John Lovering, who joined as chairman in January, the managed pub and casual dining group is to incentivise up to 60 of its senior managers with potentially sizeable payouts – triggered by rises in the shares. As well as including executives on the main board, the new pay structure will be opened up to senior operators – including the head of each of M&B’s brands – as well as senior people in the marketing team as well heads of departments of other key M&B functions such as property, buying and finance. M&B, which operates about 2,000 sites under brands such as All Bar One, Brown’s, Harvester, Sizzling, Toby and Vintage Inns, has already sought the broad approval for the scheme from 12 key shareholders. The company is seeking the wider approval of the scheme at a meeting with investors on 27 July. If approved the scheme will come into effect from the end of June 2010, with the first available date that senior managers can cash in any shares being the third anniversary – in 2013, with further possible paydays triggered in 2014 and 2015 M&B will include a “hurdle rate” clause, meaning that the options will only be available if the market capitalisation of the company has grown on average by 10% per year. Based on the current market capitalisation of £1.21bn, the scheme will only pay out if the market cap has risen to £1.61bn on the third anniversary. The 60 senior M&B managers will then get 10% of the difference between the hurdle market cap and the real market cap. Therefore if the market cap is £2bn, then 10% of the difference – £39m – will be paid into a pot, with the chief executive (Adam Fowle) receiving 10% of that pot – £3.9m – the finance director (Tim Jones) receiving 5% – £1.95m, with the rest shared out among other members of the scheme. A spokesman of M&B told M&C Report: “This is a simple way of making sure that the focus is clearly aligned with the interests of the shareholders of increasing our market capitalisation and share price. This structure means that if shareholders win, then the senior management team can have a share in those winnings.” Lovering has already stated his intention to reform pay structures M&B. When he unveiled his review, he said he wanted to change the pay culture to one "which incentivises growth and increasing shareholder value”. He added: "The company would like to implement the new [scheme] as soon as possible to create focus and momentum around the new strategy and to help attract new and retain existing talent.”