Universal Music boss set for £123m bonus as shares soar

Shares in Universal Music have surged by more than a third on its stock market debut, securing boss Sir Lucian Grainge one of the biggest payouts in corporate history.

The world's biggest record label behind Taylor Swift and Elton John has become one of Europe's largest listings this year, as its market value reached €47bn (£40bn) on the Amsterdam stock exchange.

The surge puts Sir Lucian in line for cash bonuses worth more than $170m (£123m).

Part of the payout - a transaction bonus of about $150m - was linked to Universal achieving analyst expectations of a valuation in excess of $40bn on its debut.

Universal touched €25.70 a share in morning trading, outstripping its reference price of €18.50, as investors expect its streaming income to sing despite threats of market upheaval.

Universal has a global market share of about 40pc, outstripping rivals Sony Music and Warner Music. Nine of the top 10 selling artists worldwide last year including BTS, Drake and the Weeknd were on the label, according to industry body IFPI.

The American billionaire, Bill Ackman, is now sitting on a paper gain of close to a third after taking a 10pc stake in Universal ahead of the listing through his London-listed investment hedge fund Pershing Square.

Meanwhile, shares in Vivendi - the French media conglomerate offloading 60pc of Universal - fell by more than a fifth after the group was revalued to reflect its future without the record label. It is retaining a 10pc stake in Universal.

Vincent Bollore, Vivendi's controlling shareholder, will keep an 18pc holding in the music group following the listing. Shares in the Bollore Group rose by 3pc on Tuesday.

Vivendi was pushed close to bankruptcy after seizing control of Universal in 2000 following a break-up of the entertainment assets owned by the Canadian conglomerate Seagram.

However, the music industry has enjoyed a resurgence in recent years as Spotify and Apple Music ushered in a streaming boom, handing record labels a steady flow of income from subscribers.

Sir Lucian is also poised to receive more than $20m in relation to the sale of a 10pc minority stake in the label to the Chinese tech giant Tencent last year.

After his bonuses for listing Universal, he is due an annual salary of $15m and a cash bonus equivalent to 1pc of profits, which last year would have equalled $16m.

A further cash bonus of $10m is also payable in an unusual structure that does seek to align the 61-year-old’s interests with those of shareholders by paying him in shares.

The extraordinary rewards Sir Lucian is due to receive are likely to provoke anger among artists campaigning for a greater share of the music industry’s new wealth.

Many new bands and songwriters claim it is impossible to make a living from the fractions of a penny they receive under streaming deals that have made major record labels rich again.

This summer a culture select committee inquiry called for a “complete reset” of the music market to ensure artists receive a “fair share”.

MPs called on the Competition and Markets Authority to launch a full investigation of claims that the three remaining major record labels have become too dominant and are able to squeeze out independent rivals and demand favourable terms from copyright holders.

The competition watchdog has also moved Sony Music Entertainment's $430m (£312m) takeover of smaller rival AWAL to a phase two in-depth investigation amid concerns that the deal has stymied competition.