Patisserie Valerie admits millions in undisclosed shares given to CEO and CFO

Patisserie Holdings has been forced to admit to the millions of pounds worth of share bonuses given to CEO Paul May and CFO Chris Marsh without informing shareholders.

The cake chain came under fire on 10 October when it announced the “significant and potentially fraudulent” activity on its accounts.

It has managed to survive the High Court for now, fighting off the winding-up petition which came after the £1.14m unpaid tax bill was discovered. The company’s tax bill must still be paid, however.

HMRC issued the petition against the chain’s principal trading subsidiary, Stonebach Limited. The Serious Fraud Offices began an investigation while trading in Patisserie Holdings shares were suspended.

However, its public statement to the Stock Exchange has revealed that under a long-term incentive plan, May had been granted three million share options from 2014 to 2016 and Marsh received 666,666 in share options during the same years.

These shares were issued under the company’s employee incentive scheme but had not been properly disclosed in the financial statements.

Both C-Suite executives exercised their options this year, with Marsh selling one tranche of 666,666 a 170p on 2 February while May sold one million at that price soon after on 7 February.

The pair then sold a second tranche of 666,666 and one million at 316p per share on the same day, 20 July.

According to Guardian reporting, Marsh profited about £2m and May more than £2.6m from the share sales.

The third award remains unvested for both men and it is not likely to become exercisable.

The holding company said it had only disclosed the tranche that had been awarded in 2014.

Following the finding of accounting irregularities, the company’s shares were suspended along with Marsh. Marsh was arrested on suspicion of fraud by false representation but released on bail later without charges.

CEO May quit the Board of Patisserie Valerie last week to help the group work its way out of the mess.

Patisserie’s chairman Luke Johnson had to put £20m of his own money then raise £15.7m more from shareholders through a discounted placing to prevent the business from going under.

The chain currently boasts over 200 shops and approximately 2,800 staff making its potential collapse a huge concern for those involved professionally.

The Times reported that Patisserie Valerie has appointed tax experts from Alvarez & Marshal to investigate its tax liabilities.

They will be working alongside Big Four firm PwC to go through the company’s books.