A&L next in firing line over pay-off clauses

Alliance & Leicester was yesterday among three new companies heading for a showdown with the powerful National Association of Pension Funds over alleged "payments for failure" clauses in the contracts of the bank's executive directors.

Reckitt Benckiser, the households products group, and the fund manager Rathbone Brothers have also been put on the NAPF's hitlist over their pay bonus payments to directors.

The NAPF has advised its members not to support Alliance & Leicester's report on pay for directors at its annual general meeting on 6 May.

The former building society has incurred the wrath of the corporate governance lobby because all of its executive directors would receive a pay-off worth one and a half times their remuneration if they were ousted.

Richard Pym, who stepped up to the role of chief executive of Alliance & Leicester last June, received £948,000 in salary and cash bonuses for the year. Mr Pym is not up for re-election, but two other directors who are, David Bennett and Chris Rhodes, are being opposed by the NAPF.

Alliance & Leicester, which demutualised and floated on the stock market in 1997, is seen as one of the most likely takeover targets in the banking sector.

The company indicated it is likely to reduce the compensation payments next year. They have already come down from three-year severance payments, which Alliance & Leicester gave some senior employees when it was a mutual.

The NAPF is also urging investors to block the remuneration report of Reckitt, the Mr Sheen to Vanish group, and has told members not to support the re-election of its chief executive, Bart Becht.

The NAPF disapproves of Mr Becht's contract – which also includes a pay-off worth one and a half times his base salary and two times his bonus.

Rathbone is heading for a clash over its options scheme, which the NAPF believes is not in line with best market practice. The body also wants shareholders to abstain on the re-election of one of its non-executives, Jamie Cayzer-Colvin, on the grounds that he is not independent because he is also a director of one of Rathbone's largest shareholders, Caledonia Investments.

Separately, Countrywide Assured, the estate agency group named earlier this week as being on the NAPF's blacklist, faced a shareholder revolt at its AGM over its share options scheme. Nearly one-third of shareholders refused to back its remuneration report.

Anglo-American had also been opposed by the NAPF over its share options plan. Its remuneration report nonetheless won a positive vote from 93 per cent of shareholders.

The mining group did clash with protestors over its environmental record. Friends of the Earth warned the company's plans to switch to coal-fired boilers at its paper mill in Durban, South Africa, could damage the health of locals.