Ladbroke chief under fire after 266% rise

Ladbroke Group's incentive scheme for directors came under attack yesterday after it emerged that Peter George, chief executive, pocketed almost pounds 1.3m in 1996 - a 266 per cent rise over the pounds 481,000 he was paid in the previous year.

At the centre of the controversy is Ladbroke's long-term incentive scheme, which was introduced when Mr George became chief executive three years ago and which rewards directors on the performance of the share price of the betting shops, casinos and hotels company.

Even Ladbroke's remuneration committee, headed by John Jackson, chairman of the group, admits the scheme could be over-generous.

The committee will propose at next month's annual general meeting to make the scheme more demanding, mainly through changing the performance measure to a mixture of share price performance and earnings per share growth. The committee also wants the awards to be made in shares rather than cash.

But while the amendments propose restricting the maximum bonus payout to 100 per cent of annual salary, members of the scheme will still see the value of their pay boosted by 35 per cent on the basis of an average performance in the share price.

The current scheme is based on a rolling three-year share price performance which only began to pay off at the end of last year. In the three years from 1994 to 1996 the Ladbroke share price rose 42 per cent, placing the company in 23rd position among the 93 constituents of the FTSE 100 which survived those three years in the index.

A points system for each executive with a value per point of pounds 1.60 for being in the top quarter in terms of share price performance gave Mr George pounds 600,000, and pounds 800,000 shared between three other directors. They were Mike Smith, who received pounds 400,000, Brian Wallace, who got pounds 234,000, and David Jarvis, who got pounds 166,000.

The huge leaps in the pay packets prompted sharp reaction in the City. Paul Heath, leisure sector analyst at UBS, said: "The scheme came into effect at a usefully low point in the share price cycle for the company. Certainly the City does not believe the performance has been achieved by exceptionally good management.

"Shareholders certainly want incentives for the directors but I believe they should be more related to earnings and return on capital rather than share price performance which is not the right yardstick for measuring management performance."

However, the scheme has some supporters. One analyst said: "How else do you deliver shareholder value except in relation to the share price? The concept of total return to investors is now widely accepted."

Even so, other analysts said nobody expected the directors of Ladbroke to return their bonuses if the share price were to go into a tailspin.

The pay details, contained in the latest annual report and accounts, also show that on top of last year's 266 per cent rise in Mr George's pay packet he gained a pounds 40,000 rise in his basic salary to pounds 450,000.

In addition his pension scheme was topped up by a further pounds 279,000. The pay of the four executive directors rose last year from pounds 1.86m to pounds 3.6m.

Mr Jarvis collected pounds 657,000 in 1996. He was paid pounds 98,000 for three months' work in 1995.

Mr Smith, who runs the betting shops chain, collected pounds 846,000 against pounds 399,000 a year earlier. The finance director, Brian Wallace, collected pounds 640,000 versus pounds 265,000.

Separately, compensation payments of pounds 564,000 were paid to two former directors of T&N last year, while the group's chairman, Sir Colin Hope, received an unchanged basic salary of pounds 320,000 for 1996.

William Everitt, the former director of technology who stepped down last April, received pounds 400,000 in compensation for loss of office, while Amar Sabberwal, who retired in December, was paid pounds 164,000 in compensation to bring his total remuneration to pounds 341,000.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'