UK - Mining giant Anglo American has unveiled plans to review its executives' share option scheme in a bid to placate angry pension funds.
The move comes a week after the NAPF advised members to abstain from approving Anglo American’s remuneration report because the terms of its share option scheme did not comply with best practice.
The secretary of Anglo American’s remuneration committee, Chris Corrin, said the group was aware its share option schemes did not conform to best practice at this point.
Corrin admitted the overall climate had moved against share option schemes where a “rolling target” clause gave directors 10 years to reach performance deadlines – a requirement that must normally be met within three years.
The NAPF voting issues service spokesman said he had been informed that Anglo American intended to conduct an extensive review of its compensation arrangements.
“The review will cover all components of the package and consider each of the points mentioned in [our] analysis,” he said.
This is the first time Anglo American has released its full remuneration report under new guidelines requiring companies to disclose full details for shareholder approval.
Association of British Insurers’ spokeswoman Leonie Edwards welcomed Anglo American’s move.
She said: “The main issue we raised with our members was the rolling performance targets.
“Typically these performance targets are met after three years and this scheme meant that there was a longer period to meet those targets, which we aren’t particularly supportive of.”
But several companies maintain rollover and retesting schemes introduced before the release of the ABI guidelines in 1999. These include Dixons, Scottish & Newcastle, Whitbread and plumbing supplier Wolseley.
The NAPF and ABI have both made it clear they only support “pay for performance” bonus schemes.
Companies which have been targeted this year for failing to adhere to best practice standards include Reed Elsevier, Reuters, GlaxoSmithKline and Collins Stewart.
The Pension Protection Fund (PPF) is consulting on proposals to charge a "risk reflective" levy for commercial defined benefit (DB) consolidation vehicles.
The funding gap across FTSE 350 schemes could be slashed by as much as £275bn if schemes look beyond traditional ways of creating value. Victoria Ticha examines how
There will be "many flavours" of defined benefit (DB) consolidators but consolidation will only be the right answer for a minority of schemes, Alan Rubenstein says.
Work and Pensions Committee (WPC) chairman Frank Field has questioned the regulator on what lessons it can learn from the experience of the Kodak Pension Plan No.2 (KPP2).