Unassailable and unrepentant

Article Abstract:

Long-term incentive schemes were initially proposed as a way of matching executive pay to performance. They were suggested by the Greenbury committee on UK executive pay, which made loose recommendations since companies vary. Directors were to be given bonuses only if they achieved difficult targets. In practice, these schemes have become yet another means of boosting executive pay. Institutional shareholders tend not to vote against these schemes, though there are some exceptions such as Standard Life, which are prepared to vote against schemes that do not appear to be linked to performance.

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Top pay rises run ahead of company returns

Article Abstract:

UK directors' pay may rise sharply even when a company is not performing well, in terms of its share price, according to research from Income Data Services. The study examines pay in 100 major UK companies and excludes pension contributions. One example is Geoff Mulcahy, chief executive of Kingfisher, whose pay rose by 45% when the company's share price rose by only 2%. Kingfisher has underperformed the FTSE-100 by 19% in the five years to Sep 1996. Safeway has underperformed by 27% and the company's chairman, Alistair Grant, received a 28% rise at a time when the share price dropped by 9%.

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Share plan not so prudent, say critics

Article Abstract:

The UK Greenbury committee has given advice on how boards of directors should be paid, and UK companies claim to be following this advice. Nevertheless, the controversy over executive pay continues with the example of Prudential. The company faces charges that a new incentive scheme could provide rewards for executives whose performance is poor. The company claims that its scheme should be seen as a whole, but critics argue that it does not take a long-term approach.

Insurance, Insurance Carriers and Related Activities, INSURANCE CARRIERS, Insurance industry, Prudential Corporation PLC

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