The Week Ahead: C&W faces the music over its lavish executive incentives

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The Independent Online

Executive pay is set to come into sharp focus in the latest round of annual general meetings this week. Struggling telecoms company Cable & Wireless is in the firing line after raising the hackles of corporate governance groups over its dazzlingly lucrative incentive scheme for management. UK boss John Pluthero and Harris Jones, who heads the company's international operations, will reap up to £22m each if C&W's performance improves.

The Association of British Insurers, representing institutional investors, has criticised the remuneration scheme and given C&W an "amber top" warning to alert shareholders. The ABI warns that the scheme "does not go far enough in linking reward to long-term value creation". Fellow shareholder group Pirc also opposes the scheme, citing inappropriate performance conditions, rises of up to 20 per cent in base salaries and the awarding of share options with a face value of up to 10 times individual executives' salaries. Another group, Manifest, has also raised concerns.

The company reported a 30 per cent slump in profits in May, so shareholders will also be keen for reassurance about its performance at the AGM. C&W, however, is expected to reveal continued tough trading conditions. It may discuss the benefits of withdrawing from the retail broadband market, despite questions over whether it has sufficient scale in its wholesale business.

By contrast, BSkyB will unveil its broadband aspirations at its AGM on Tuesday. Barclays Stockbrokers expects ambitious targets for improving market share but cautions that there could be significant costs involved. Analysts might therefore be downgrading their earnings forecasts after the meeting.

Elsewhere, directories company Yell and retailer GUS, which last week reported strong earnings at its Argos stores, have also been criticised for their remuneration policies. Both will face the music at their AGMs this week.

Financial services group Resolution will be holding an extra- ordinary general meeting for shareholders to vote on its £3.6bn purchase of Abbey National's life operations, unveiled last month. No opposition is expected to the deal and management is expected to be upbeat on trading conditions at tomorrow's meeting.

But boardroom controversy will never be far away this week. Another company that could face the wrath of shareholders is British Airways, which recently revealed that it was being investigated by regulators and faced legal action over price-fixing allegations surrounding fuel surcharges. The airline is, however, expected to be fairly upbeat in its trading assessment after reporting that passenger traffic in June was up 6.6 per cent. Goldman Sachs expects BA's revenue growth to remain the best in the sector.

Sticking with controversial companies, government contractor Capita, which, among many other things, manages TV licence fees, releases interim results on Thursday. Capita's founder and chairman, Rod Aldridge, stepped down earlier in the year after it was revealed he made a £1m loan to the Labour Party. However, Capita is tipped to produce a bullish result with Charles Stanley predicting a "material increase" in profits, although it cautions that Mr Aldridge's departure clouds its long-term outlook. Investors will also be keen to hear about further deals in the pipeline.

Meanwhile, mining giant Rio Tinto's production volumes are expected to be strong, particularly in iron ore and copper, when it provides its latest update on Wednesday. Many analysts are upbeat about Rio's prospects, despite adverse exchange rates.

Down in the casino, Stanley Leisure will unveil its full-year results on Thursday and is expected to meet market expectations of a £38m pre-tax profit, against £39.2m last year, due to tough trading in the first half. Stanley recently confirmed it was in talks about a possible merger with London Clubs.

JD Wetherspoon will provide a fourth-quarter update on Wednesday. Like-for-like sales, which exclude new pubs, are likely to be down by 2 to 3 per cent, though the World Cup helped to stem the decline after JD Wetherspoon installed TV screens in its outlets for the first time. With conditions slowly improving, analysts are now looking for a full-year decline of only 0.5 per cent.

PartyGaming is also expected to update the market, and here revenue for the most recent quarter is likely to be up 48 per cent on the same period last year. However, the online poker firm is expected to be down 7 per cent on the previous quarter as the pace of this high-growth market starts to ebb.

MFI, the furniture manufacturer and retailer, will be producing interim numbers and is expected to show pre-tax losses, excluding one-off items, of £5m as it continues to struggle in tough conditions.

However, most investors will be far more interested to hear how the auction of its loss-making retail chain is progressing. Frontrunner Apax Partners is thought to be interested in merging MFI Retail with the venture capitalist's DIY chain, Focus.

Finally, Boots's AGM on Thursday shouldn't be stormy as its merger with Allied UniChem was passed by shareholders at a recent special meeting. It won't be providing a trading update.


Tomorrow 17

UK RESULTS: none scheduled

Tuesday 18

UK RESULTS: (final) NCC; (interirm) London Scottish Bank

Wednesday 19

UK RESULTS: (F) Vantis; (I) QXL Ricardo

Thursday 20

UK RESULTS: (F) Stanley Leisure; (I) Capita, MFI Furniture; (Q2) Colt Telecom

Friday 21

UK RESULTS: none schduled