£1.2m power chief says: I'm worth every penny

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The Independent Online
The row over share option profits among electricity bosses erupted again yesterday as the Government forged ahead with its plans for the £4bn sale of shares in National Power and PowerGen. Ed Wallis, the chief executive of PowerGen, defended his much-criticised £1.2m share option bonanza, claiming that he was worth every penny he made. However, Gordon Brown, the shadow Chancellor, said that the "corporate greed scandal" at both National Power and PowerGen is just the tip of the iceberg.

Mr Brown said that share option payouts in the two companies could ultimately amount to as much as £23m, and he blamed the Government - as the largest shareholder - for these "excesses". "With 40 per cent of the shares in PowerGen and National Power, it has failed to use its influence as the biggest shareholder to curb corporate greed," Mr Brown said. He called on the Government to give power to shareholders and the regulator, Offer, to curb the "abuses" in companies.

Mr Wallis made the money last year by exercising share options that he received in addition to his £400,000 basic salary. He said: "I think I'm worth what I'm paid. Of course I am."

Mr Wallis was speaking at the launch of the Government's pathfinder prospectus on the share sale. It emerged that private investors would have to spend £1,000 minimum to take part in the sale.

The occasion was clouded by publication of an independent management survey which revealed that PowerGen executives had made a total of £5.3m by exercising their share options last year.

Mr Wallis said: "The company has done very well and shareholders have benefited. All I would say is that my pay is independently set. I do not negotiate it myself."

Mr Wallis also said he owned a "substantial" number of fully, paid-up shares."I did not take in cash a figure anything like the sums which are being attributed to me." It is understood that Mr Wallis realised about £740,000 in cash, and ploughed the remainder of the money into buying more shares.

John Baker, the chief executive of National Power, said that the row over share options would not damage the Government's sale. Mr Baker, who has made £700,000 through share options, said that information on directors' pay and conditions is fully disclosed and has never prompted questions from shareholders since the company was privatised in 1991.

In a separate development, Greenpeace, the environmental group, called on the public to boycott the share sale. The group said that National Power and PowerGen activities create £2.9bn worth of environmental damage each year. "Our message to investors . . . is don't buy into pollution profits; don't buy shares in National Power and PowerGen."

Both National Power and PowerGen announced big increases in dividends to investors yesterday as the £4bn share sale got fully under way. National Power is lifting its yearly payout by 24 per cent while the PowerGen dividend increases by 18 per.

Some 2.4m people have so far registered an interest in buying the shares, well ahead of level of interest at comparable stages of previous privatisations.

Hefty dividends, page 24