Mark Selway, chief executive of Weir Group, defended controversial plans to award him £3.5m in shares if he stays for three years saying shareholders had benefited from huge growth at the engineering firm during his time in charge.

Mark Selway, chief executive of Weir Group, defended controversial plans to award him £3.5m in shares if he stays for three years saying shareholders had benefited from huge growth at the engineering firm during his time in charge.

Highlighting an increase in the market capitalisation of Glasgow-headquartered Weir Group, from £435m to around £1.7bn in the last five years, the Australian executive said shareholders would be "pretty happy with their lot".

While shares in Weir Group fell 8% yesterday the decline appeared to be the result of profit-taking following a strong run for the stock which has out-performed other London-listed engineers in recent months.

Announcing what he described as a "cracking set of results" for the first half, yesterday, Selway said the company was well placed to deliver continued growth. It was only right that he should share in the rewards.

Although 15% of shareholders expressed their displeasure at the company's annual meeting in May over a plan to award Selway a one-off multi-million-pound award in shares if he stayed for three years, Selway told The Herald the plan was "a very equitable solution".

"We are increasing the dividend 12% this year. I have got some very tough financial targets to achieve. If they are delivered shareholders would be very happy."

Selway, who took charge of Weir in 2001, said the business was in great shape following a programme of acquisitions and disposals which has left the business focused on three key markets: minerals, oil and gas and power. All are set for sustained growth.

Weir continued to benefit from the £195m acquisition of the Warman International mining pumps business in 1999 under Ron Garrick, said Selway. However, he drew attention to deals that he has master-minded including the £328m purchase of SPM Flow Control, which serves the oil and gas industry, last July.

Having sparked a furore by proposing to sell the historic Cathcart pumps business to Swiss rival Sulzer, before engineering entrepreneur Jim McColl paid £45m for the firm last May, Selway hinted there could be a further reduction in Weir's operations in Scotland.

Weir announced that LGE, an Edinburgh business which employs 108 people in the design and assembly of liquid gas handling and storage systems, was one of several which were not aligned to the majority of the group.

Selway said LGE had a fantastic team and had achieved exceptional growth, but operated in a different cycle.

"We need to take a decision on where it fits in the longer term."

Asked if that meant LGE might not fit, he said: "We really have to go through a full strategic review."

A disposal of LGE would leave Weir with 447 employees involved in engineering work for oil and gas and power clients in Scotland.

However, Selway said Weir was "passionate" about its Scottish identity and confirmed the status of the headquarters, where 38 people work, was not under review.

While yesterday's share price fall may have reflected disappointment that Weir simply confirmed it was on track to meet forecasts for the year, rather than exceeding them, analysts agreed the firm looked to be in great shape.

In the 26 weeks ended 27 June, Weir increased pre-tax profits by 85% to £82m compared with the first half last year. Revenues increased 46% to £632m.

The results showed that recent acquisitions had helped increase the rate at which both revenue and profits increased.

"The outlook for all our end markets remains strong. There's really good legs to all the sectors we're involved in," said Selway.

" We are extremely well placed in all the geographies that are running ahead."

Despite concerns about the global economic outlook, Selway said there had been no sign of any slow down.

Although he was very happy with the shape of Weir's portfolio, Selway said he was still on the look-out for acquisitions. He is keen to increase Weir's presence in the downstream oil and gas business.

A new £550m credit facility provided by Royal Bank of Scotland gives Weir plenty of "headroom" for deals.

Shares closed down 73p at 830p, giving Weir a market capitalisation of £1.72bn.