Comment: Ladbroke's incentives are a good bet

The annual accounts season is well and truly upon us. It is perhaps a comment on our times that they are read these days more for what they tell us about the earnings of top executives than the affairs of the companies they are meant to represent. The latest case of "excess" comes from Ladbroke Group, where a long-term incentive plan has caused the earnings of the chief executive, Peter George, to rocket from pounds 481,000 in 1995 to an astonishing pounds 1.3m last year.

Approximately half of this sum comes from the LTIP, which appears, from the little we are told about it in the annual accounts, to be based solely on the performance of Ladbroke's share price. Fortuitously for Ladbroke's executive directors, the plan was set up when Ladbroke's share price was on the ropes. That's helped Ladbroke to become the 23rd best-performing share in the FTSE 100 share index over the past three years and apparently justifies this whopping great payout.

Such are the delights of these Greenbury-approved LTIPs, however, that Mr George would have received something like pounds 160,000 even if Ladbroke had underperformed the index and the company come in at number 75. Some incentive. Subject to shareholder approval, the accounts say, the remuneration committee has decided to introduce modifications to the scheme this year "to make the achievement of reward more demanding".

Good of them, that, but it's not clear it will make much difference. For the remuneration committee receives "regular advice from external independent consultants", you see, and they say that executive pay should be in line with Ladroke's leading competitors and "other companies which operate internationally". Thus is the going rate for the job perpetually bid upwards.