UK - Abbey National faces a potential shareholder backlash at today's annual general meeting over "exceptional bonuses" paid to top executives.
The 2003 bonuses and Abbey’s plans for a new incentive scheme are expected to dominate the annual meeting but have divided corporate governance experts.
While the National Association of Pension Funds has flagged Abbey’s remuneration policy as an issue of concern for members, it recommended a vote in favour of all resolutions.
But investor lobby group Pension Investment Research Consultants urged members to block Abbey’s remuneration report and proposed an incentive scheme.
Abbey – which is in the process of selling its wholesale bank to become a personal financial services company – paid chief executive Luqman Arnold a salary of £675,000, a cash bonus of £608,000 and a bonus of £405,000 in shares.
But the NAPF questioned whether the remuneration policy was in line with shareholder interests and was disappointed with the exceptional bonus payments.
The NAPF – despite recommending support for Abbey – noted that the 2003 performance had been marred by the Financial Services Authority’s £2.3m fine in December for breaches of money laundering rules.
The NAPF also backed the new executive remuneration plan – offering higher annual bonuses based on performance – which, Abbey claims, is likely to rule out future excessive payments.
An NAPF spokesman said: “While we support the payment of bonuses in deferred shares rather than cash, we question whether exceptional bonuses are appropriate prior to concrete evidence of the long-term success of Abbey’s transformation.”
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