UK - Corporate governance ex-perts are predicting "intense confrontation" over new share plans which can reward directors up to 900% of salary.
Institutional investors have been urged to scrutinise company reports ahead of annual general meetings amid warnings that hidden reward schemes could be “excessive”.
Proxy voting agency Manifest said share options were generally welcomed as a form of remuneration as they aligned the interests of executives with the company.
But options at a number of companies – including the Royal Bank of Scotland which has its AGM on April 29 – have been flagged up as “excessive” and not sufficiently linked to performance.
Under the RBS medium-term performance plan, directors are eligible for 900% of salary and bonuses, which could give chief executive Fred Goodwin shares equivalent to more than £8m.
Manifest spokesman Alan Brett said that while annual bonuses for directors at RBS had been reduced by around 40% since 2002, the share options often went unnoticed by shareholders.
He said: “When the scheme was adopted in 2001 the bonus cap was 100% of salary but it has now gone up to 200%, and the true potential of the scheme is only now becoming apparent.
“Share options hide the true potential of the rewards sch-eme from investors and you have to dig deep to find the end figure.”
A similar share incentive scheme for ITV chief executive Charles Allen is expected to cause concern for investors at the broadcaster’s AGM on Monday.
Investor lobby group Pen-sions Investment Research Consultants has urged shareholders to block the plan, which will net Allen £6m over four years.
PIRC claims the scheme offers “excessive rewards” but ITV said it “struck the right balance” between shareholder interests and “incentivising management”.
Advertising giant WPP is also putting its incentive scheme LEAP to shareholders at an extraordinary general meeting tomorrow (Friday).The meeting was delayed after opposition to the proposal from shareholders. The scheme, which could earn chief executive Sir Martin Sorrell £44m in shares over 10 years, is opposed by PIRC and ABI, but supported by the NAPF (see PP, April 1).
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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