Bonuses stopped as beer goes flat; RETAIL: Directors at struggling M&B sacrifice big payouts.

Byline: By Jon Griffin

MITCHELLS & Butlers chief executive Tim Clarke has deferred a pounds 462,000 bonus after the company was forced into the red.

Mr Clarke and three other executives at the Birmingham pub group, including finance director Karim Naffah, have foregone their bonus payments for now in the wake of a complex City deal.

The move is outlined in the annual report, which says: "Challenging performance goals are set which must be achieved before a bonus becomes payable."

The report addresses investor concerns over a hedge fund and said: "Executive directors have offered to freeze final consideration of whether a bonus should be paid... pending a review at the half-year or later, if appropriate."

Reports said directors had urged calm over M&B's potential losses from the hedging positions, which are bets against long-term interest rate rises and long-term deflation.

At the end of the group's accounting year potential losses from the hedges had raised pounds 221 million before tax, which generated an exceptional charge that more than wiped out the underlying pre-tax profits of pounds 207 million.

Last month M&B said the hedges were showing a pre-tax loss of about pounds 260 million and potential losses may have widened further following last month's cut in interest rates.

M&B's report said: "The hedges remain in place as the board believes it is likely that these financial instruments will be used in future property-based refinancing once debt markets have stabilised."

The hedge positions were taken out in July, raising debt to fund a pounds 4.5 billion property joint venture with real estate tycoon Robert Tchenguiz.