The proposed long-term incentive plan had met serious opposition from institutional investors, who said it was too generous and too complicated. But intense lobbying of big shareholders by the United board over the last week paid off when a resolution to introduce the plan was carried on a card vote by a majority of two to one.
According to Pirc, the corporate governance consultancy, none of United's institutional investors attended the meeting. Their views were made known by proxy votes instead. Those shareholders who did turn up to the G-Mex centre in Manchester were greeted by demonstrators, some wearing pantomime catsuits and holding placards, one of which read "put the fat cats on a salary-controlled diet".
In a mock coronation ceremony outside the conference hall, Labour shadow employment spokesman Ian McCartney personally "crowned" Sir Desmond Pitcher, United's chairman, "King of the Fat Cats for services to Fat Cattery".
Mr McCartney added: "Every time people in the North-west turn on a tap or a light switch they are helping to feather-bed the greedy lifestyle of the directors."
Sir Desmond, who last year received more than pounds 332,000 in salary and bonuses, defended the incentive plan, which replaces an existing share options and bonus package. "Management will have to do a lot better than now to get anything," he told one shareholder during a heated exchange. "This company has built a powerful and committed executive team and, as with all major companies, must be incentivised in line with shareholders' interests if the growth in shareholders' value at the optimum rate is to be achieved."
However, in a sop to institutional investors he promised to keep the scheme under review. "There are areas of concern and the board has asked the remuneration committee to continue to discuss the issues with the objective of achieving broad consensus. Should this consultation process lead the committee to the view that the scheme could be improved, then this will happen."
Institutions supporting the plan included CINMan, the fund manager taken over by Goldman Sachs, and Legal and General. Only Clerical Medical and General stated publicly it would vote against. The main focus of concern among shareholders has been the yardstick against which United measures future performance.
The new long-term incentive plan rewards executives according to United's performance against other blue-chip companies, up to a maximum of 87 per cent of their basic salary. Directors are eligible for awards if United ranks in the top 50 FT-SE companies and earnings per share rise by at least 2 per cent above inflation a year.
There is also a separate performance-related bonus scheme for directors linked to increases in pre-tax profits.
It was met in full last year and paid out a maximum 40 per cent of salary. Three directors also received bonuses of up to pounds 48,000 each for "the exceptional burden borne by them" in relation to North West Water's acquisition of Norweb last year.
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