At least two large institutional investors - Standard Life and National Provident Institution - have warned they will vote against the scheme and there were signs last night of the rebellion spreading.
A further four institutions - Norwich Union, Guardian Royal Exchange, Equitable Life and Clerical Medical - are thought to be unhappy about the terms of the scheme.
The concern centres around the lack of sufficiently demanding performance targets attached to the options. Under one of the schemes the executives will be able to exercise so-called super-options if GEC does no more than achieve median performance in terms of total shareholder return compared with the rest of the FTSE 100 Index.
This is the second year in a row that GEC has run into trouble over the issue of executive pay. When George Simpson, now Lord Simpson, took over as managing director last September, GEC was forced to tighten the performance targets triggering parts of his pounds 10m pay package after protests from institutional shareholders.
Under guidelines issued by the Association of British Insurers, super- options are normally only exercisable if exceptional performance is achieved - which means being in the top quartile. In the case of GEC, 35 per cent of the options, which are worth four times salary, will be exercisable provided total shareholder return (increase in share price plus dividends) hits the median.
Guy Jubb of Standard Life said: "In my book that does not amount to exceptional performance. I hope the number of votes against the scheme and the level of abstentions will send a significant message to the GEC board."
There is also institutional unrest over another element of the remuneration package which allows GEC to give the executives bonus-matching shares equivalent to 25 per cent of the annual performance bonus provided half that sum is taken in the form of ordinary shares. The award of the bonus shares does not depend on any performance targets being met.
Yvette Hood of NPI said it had voted against both the super-options scheme and the matching bonus scheme because neither met ABI guidelines. "The performance criteria that trigger the options awards are not high enough and we are unhappy about that."
Another scheme entitles the executives to exercise share options again worth four times salary provided earnings per share growth exceeds the RPI by 6 per cent over a three-year period. This scheme is not being objected to but because of the way GEC is seeking shareholder approval for all the schemes under one composite motion, many institutions will be obliged to vote against it.
Richard Regan, head of investment affairs at the ABI, said: "We want to see credibility restored in these long-term incentive schemes and the only way to do that is to ensure they have appropriate and demanding targets. GEC's scheme would appear not be to consistent with the spirit of our guidelines."
The indications last night were that the vote would be close although the GEC camp appeared to be confident that it had secured the support of enough large shareholders to carry the day. However, opposition from a significant minority of large shareholders is certain to cause embarrassment for the group and may lead it to amend the performance targets attached to the schemes in future.
Lord Simpson and the board may also come under fire over the level of pay awards last year. The group's annual report and accounts show that Lord Simpson received pounds 1.141 million for seven months work last year, including a discretionary bonus of pounds 160,000.Reuse content