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GEC climbdown on Simpson pay

GEC last night bowed to mounting pressure from institutional shareholders and amended the most controversial aspects of a pay package worth up to pounds 10m awarded to its incoming chief executive, George Simpson.

The climbdown came after Richard Regan, head of investment affairs at the Association of British Insurers, met representatives of the electronics giant yesterday for talks.

In a move designed to head off an embarrassing showdown at Friday's annual meeting, the electronics giant agreed to water down the conditions attached to Mr Simpson's long-term incentive plan.

"GEC is pleased to confirm that the criteria will comply with the ABI's current guidelines requiring top quartile performance based on appropriate benchmarks," the company said in a statement.

"GEC and Mr Simpson have always envisaged that challenging performance criteria would be attached to awards made to Mr Simpson under the GEC employee share plan."

GEC said its share price must now exceed by at least 10 per cent the growth in the FT-SE 100 index over a three-year period before the scheme kicked in. But the company declined to say what Mr Simpson's maximum salary under the revised scheme would be.

Under the terms of the original deal, options based on pounds 4.8m of shares - or eight times Mr Simpson's annual salary - could be exercised if GEC's share price beat the FT-SE 100 average by 10 per cent in any six months within a specified three-year period. Last night it looked as if GEC's U-turn would be enough to prevent a full-scale shareholders' revolt at this Friday's shareholder meeting.

Institutional investors, who were unhappy the original performance targets were not tough enough, gave the new pay deal a cautious welcome. "It brings GEC much closer to best practice, it's now more meaningful," said one.