Manuel Pellegrini has agreed a deal to take over as manager of West Ham United worth up to £7 million-a-year including bonuses. An announcement will be made this week.

The 64-year-old Chilean will be the highest-paid manager in West Ham’s history, earning more than twice the amount paid to his predecessors, with a £5m-a-year basic salary. Bonuses will be paid on top of that, including one for qualification for European competition.

Pellegrini flew to London on Sunday and was given a tour of West Ham’s London Stadium and the club’s training facilities before agreeing terms with co-owner David Sullivan, whom he knows.

The length of the deal has not been confirmed but it is understood to be for up to three years with West Ham pleased that Pellegrini signalled his desire to join them by quitting Chinese club, Hebei China Fortune.

West Ham do not have to pay any compensation for Pellegrini and had been been concerned at the £6m Newcastle United would have been due if they agreed to release Rafael Benítez. The Spaniard was not necessarily West Ham’s first-choice – they had made it clear they wanted to speak to Pellegrini and others.

Last week it was suggested by senior sources at West Ham that a shortlist of four high-calibre, trophy-winning managers had been drawn up. Whether the club actually got to speak to all four of the managers is a moot point but that list was Pellegrini, Benítez, Paulo Fonseca, who did meet with Sullivan but who subsequently agreed a new contract at Shakhtar Donetsk, and Unai Emery who has been sacked by Paris Saint-Germain and would like to move to the Premier League rather than return to Spain.