UK - An incentive scheme for executives at luxury housebuilder Berkeley Group has been attacked by institutional investors.
The scheme could net the firm’s top four executives between £60m and £150m if they stay on until 2010.
But Isis Asset Management, which has a 1.6% shareholding, said it had “serious reservations” and might vote against the scheme when Berkeley seeks shareholder approval on September 17.
Berkeley is proposing a restructuring of the firm which will see £1.45bn returned to investors (£12 a share) over the next six years.
But this is on condition that 15pc of what is left goes to management in 2010. The housebuilder has linked the restructuring with its executive reward scheme, forcing investors to vote on the whole package.
But Isis corporate governance director Richard Singleton warned that shareholders were likely to object to being asked to hand over 15% of the company with no way of evaluating what that would be worth in six years’ time.
He said: “If you don’t know what you’re getting, having a fixed percentage seems a very odd way of going about incentivising management.”
The Association of British Insurers gave its strongest warning - a red top alert - to investors about the restructuring plan.
ABI head of investment affairs Peter Montagnon said it was “regretful” that the company had not considered alternatives and the dialogue with shareholders had been “poor throughout”.
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