Comment: GEC package gives too much to too few

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George Simpson, managing director of GEC, arrives at today's annual meeting with enough proxies in his back pocket to steamroller through the group's latest and remarkably generous executive remuneration scheme. The victory will be a Pyrrhic one since a large minority of shareholders will have voted against the package while more still will have abstained in silent protest.

GEC cannot be faulted for wanting to find ways of rewarding its senior staff better after the parsimony of the Weinstock years. Nor can a scheme which aligns the interests of executives more closely with those of shareholders be a bad thing. If Lord Simpson is to turn his blueprint for GEC into reality after a long period of false dawns and share price underperformance, then what better way than to harness together the fortunes of the company and those who run it? GEC has increasingly discovered that when it comes to recruiting and retaining top-flight executive material, then the blunt instrument of the annual bonus is not always sufficient.

So far so Greenbury correct. Where the remuneration package being voted on today comes unstuck is in the sheer size of the fortunes that a small group of executives stand to make and the modest performance targets they will have to meet for the cash registers to open. Admittedly, only 20 or so of the 200 executives to whom the package applies will be in line for "super options", but they stand to earn eight times their salary (not counting, of course, the annual performance payment topped up by a quarter in the form of bonus shares). Rewards on this scale are surely excessive in an established organisation like GEC. Amazingly, it only requires GEC to achieve median performance against its peers in the FTSE 100 to trigger the exercise of the super options.

The architect of this scheme is the unlamented Lord Rees Mogg, who retires tomorrow as a non-executive and chairman of the remuneration committee. After today's hubbub has died down, the new intake of non-execs, including Reed Elsevier's Nigel Stapleton and Baronness Dunn, should take a fresh look at the remuneration package. They should start by telling Lord Simpson that when he decided to distribute GEC's cash pile, the idea was not to shower quite so much in the direction of his top executives.