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Check on million-pound pay club

Sir Geoffrey Mulcahy's membership of the million-pound pay club is to be suspended for at least a year, with the remuneration committee at Kingfisher insisting that the demoted chief executive waive his annual bonus of more than £300,000.

The remuneration committee, headed by Sir Nigel Mobbs, is understood to be keen to repair bridges with investors who have seen the value of their holdings in the Woolworth, Comet and B&Q retailer nose-dive in a little over a year from 778p to 438p a share.

His bonus, which is paid a year in arrears, would have looked out of kilter with the company's latest trading performance in the year to 29 January.

Retail analysts had expected pre-tax profits to move ahead from £309m to £320m, but their projections were blown off course in late January by a trading warning and the first installment of a radical boardroom shake-up that saw the departure of Alan Smith, who was recruited as chief executive from Marks & Spencer two years ago.

The company refuses to discuss Sir Geoff's pay ahead of next week's announcement of results for 1994/95.

However, sources say that Sir Geoff's base salary and pension payment, respectively £622,000 and £264,000 in 1993/94, are unlikely to be affected.

Loss of the bonus may not be enough to fully placate the investors, some of whom were particularly angered by the recent discovery that the company pays for personal tax advice for Sir Geoff and his wife, Lady Valerie.

This situation is unlikely to survive the wrath of shareholders, many of whom want to see more heads roll at Kingfisher.

The recent rounds of boardroom sackings at the troubled group were described as one analyst as "simply rearranging the deckchairs".

Pressure is likely to be applied by institutions to try and force Kingfisher to alter the terms of the executive bonus scheme.

Bonuses, which do not form part of pensionable earnings, are anticipated, according to the company's last annual report and accounts, to be normally in the "region of 30 per cent to 50 per cent of salary".

Annual bonuses are linked to financial targets, earnings per share growth averaged over three years, return on capital employed, and the achievement of strategic objectives.