Mead Johnson bosses hit £25 million jackpot after Reckitt takeover

Reckitt Benckiser will have to pay off Mead Johnson’s executives more than $30 million following its $16.7 billion takeover of the US baby formula maker, regulatory filings reveal.

Mead introduced a “golden-parachute” pay scheme in 2014, meaning six executives will receive a total of $31.7 million (£25 million) if they are let go within two years of a takeover.

News of the massive windfall for Mead’s executives raises more questions about whether the Illinois-based company behind Enfamil powdered formula is a good target for the Footsie consumer goods giant behind Durex condoms and Dettol. It means Reckitt will have to buy Mead’s executives out of expensive contracts.

The takeover talks emerged a week after Mead reported an 8% fall in net sales last year to $3.7 billion and predicted sales would tumble again this year.

Profits also fell last year. Shortly after the introduction of the golden-parachute deal, the company’s sales and stock market rally began to unravel. The shares dived 22% in the last six months of 2016.

Mead’s chief executive Kasper Jakobsen, a former marketing executive at Unilever, is the main beneficiary of the company’s so-called “executive change in control plan”.

Jakobsen is set to receive a $13.7 million golden handshake if he is fired within two years of the takeover completing, according to regulatory filings. His basic salary is $1 million.

The terms of the pay deal state that he should receive three times his salary and bonus if he is let go after a takeover. The rest of the $13.7 million sum is made up of stock options, benefits and long-term performance awards.

Others set to get multi-million-pound pay-offs include chief operating officer Charles Urbain and chief financial officer Michel Cup, who will pocket $4.8 million and $3 million.

Jakobsen and Urbain also own shares worth around $4.5 million each at the $90 offer price.

Reckitt and Mead declined to comment.