C&W chief could earn pounds 1.7m following `golden handcuff' package
Saturday 04 October 1997
Leading shareholders in C&W were told of Mr Brown's pay increase in a recent letter, as the company attempted to gauge reaction to a package which would give him a minimum annual share bonus worth 80 per cent of his salary. The new pay award amounts to a "golden handcuff" arrangement to encourage the Mr Brown, a US citizen who joined C&W in July 1996, to stay at the helm until 2000.
C&W launched the review after fears that Mr Brown would be approached with a job offer from AT&T, the world's second largest phone company. AT&T has been searching for a new chief operating officer after the surprise resignation of John Walter in July. Mr Walter, who was paid $22m when he joined AT&T last year, left after being refused the chairman's job.
It is understood that Brian Smith, C&W's chairman, appointed outside consultants to review Mr Brown's pay the day after Mr Walter resigned. They measured his salary against other international telecommunications companies, including MCI and AT&T, and found Mr Brown's compared "very unfavourably". C&W declined to comment on whether he had actually made it on to AT&T's shortlist.
C&W yesterday confirmed the details of the package, which included raising Mr Brown's basic salary by a third, from pounds 487,500 to pounds 650,000. The increase took effect during the current financial year, which started on 1 April, despite the fact that some investors have yet to give the company their verdict.
It is the share bonus element of the package which is likely to prove the most controversial. C&W has doubled the total possible share bonus award under its long-term incentive plan from 60 per cent to 120 per cent of salary. The new bonus scheme would only take effect if Mr Brown stayed with C&W for three years.
The increase, which applies solely to Mr Brown, could see him awarded C&W shares worth up to pounds 780,000 this year. To gain the maximum bonus, C&W's earnings have to grow at 15 per cent above inflation over a three- year period. No changes were made to the performance targets during the pay review.
Most surprisingly, the minimum award of shares possible under the scheme has gone up from 10 per cent of salary to 80 per cent, almost guaranteeing Mr Brown a pounds 520,000 share bonus, compared with just pounds 65,000 under the old scheme. The minimum award is paid out if C&W's earnings grow at 2.5 per cent above inflation over a three-year period.
Under the existing remuneration scheme Mr Brown is also entitled to an annual cash bonus on top, worth up to 40 per cent of salary, which would give him another pounds 260,000. Taken together, the basic salary and short and long-term bonus plans would give Mr Brown a pounds 1.69m pay packet this year, assuming C&W meets the top performance criteria. He was paid pounds 1.24m last year, including a pounds 306,517 relocation allowance.
It would make him one of the best paid chief executives of a company in the FTSE 100 share index. Sir Peter Bonfield, chief executive of British Telecom, is on a pounds 570,000 salary, while Sir Iain Vallance, executive chairman, is paid pounds 500,000.
Sources close to C&W indicated big shareholders were mostly happy with the bonus scheme. But one investor canvassed yesterday warned that the increase in the minimum share bonus, with no rise in performance targets, was worrying. "I suspect it's a rather large bonus payment for pretty mediocre performance targets. We would like to see the targets based on peer group comparisons in the telecoms industry and total shareholder returns, including share price increases."
C&W said Mr Brown's success in his first year had made him a "highly marketable international chief executive". Mr Smith continued: "The chairman's job is to get the best talent and to keep it. I don't want another head- hunting exercise."
The company's prospects have improved markedly under Mr Brown, who joined after the high-profile resignations of Lord Young, chairman, and James Ross, chief executive. He swiftly put together deals to merge Mercury Communications, C&W's main UK business, with three cable companies and secured an agreement with China over the future of Hong Kong Telecom, C&W's most lucrative cash cow. Over the past year C&W's share price has risen by 33 per cent.
filmFilm producers sue Warner Bros for $75m over Hobbit films
sportNapoli 2 Arsenal 0: Gunners must now face either Real Madrid, PSG, Bayern Munich, Atletico Madrid or Barcelona in knock-out stages
Swedish stars ask fans for £195 pledges on crowd-funding website
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
musicAs Mariah Carey and Noddy Holder rake in the royalties from their classics, why there hasn't been a decent festive hit for 20 years?
theatreAuthor Daniel Rosenthal recalls the mishaps that almost brought the curtain down on the likes of John Gielgud and Diana Rigg
lifeAs the Royal Mail plans to phase out deliveries on two wheels, it's no wonder posties are in a spin
musicThe 21-year-old beat Ella Eyre and Chlöe Howl to win the honour
lifeFull of the joys and want to help your fellow man? December isn't the time to do it
techLuke Blackall reports on precision engineered prams and babygros that monitor your child 24-7
Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute in Soweto
David Cameron explains selfie with Obama and Helle Thorning-Schmidt at Mandela Memorial
French café starts charging extra to rude customers
Krokodil in Mexico? Teenager hospitalised after 'injecting drug into her genitals'
Australia incest case: Filthy and severely deformed children found in remote farming community after generations of inbreeding
- 1 Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute in Soweto
- 2 John McAfee's $100 'anti-NSA' device: 'this is coming and cannot be stopped'
- 3 French café starts charging extra to rude customers
- 4 Is Facebook making us forget? Study shows that taking pictures ruin memories
- 5 Australia incest case: Filthy and severely deformed children found in remote farming community after generations of inbreeding
iJobs Money & Business
£77099.84 - £96375.26 per annum + Bonus + Benefits : Harrington Starr: My clie...
£45000 - £60000 per annum + Bonus and Package: Harrington Starr: Trading appli...
£50000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...
£70000 - £90000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...