One of the City's leading shareholder organisations has attacked corporate governance practices at the newspaper publisher Daily Mail & General Trust, including the contract terms enjoyed by the company's most senior editor, Paul Dacre.
The Association of British Insurers is also critical of DMGT's share options scheme for top executives and the composition of its remuneration committee. Mr Dacre, 57, has been editor of the Daily Mail since 1992 and is regarded as one of the most fearsome and brilliant figures in Fleet Street. Unusually for an editorial employee, Mr Dacre sits on the main DMGT board, where he has had a seat since 1998. The ABI has issued a "red top" letter to its members, marking the subject out in the body's most serious category for corporate governance concerns.
The shareholder group said Mr Dacre's two-year rolling contract was against best practice, as corporate governance codes asked for contracts no longer than a year. Last year Mr Dacre earned £997,000, meaning that if his employment was terminated, he would be in line for a pay-off worth at least £2m. An ABI spokeswoman said: "Contract lengths should be the same, no matter what the role is."
According to DMGT, Mr Dacre's situation is different from other board members. The contract terms of DMGT's chief executive, Charles Sinclair, and its finance director, Peter Williams, are in the process of being reduced, in stages, from two years to one year.
In its annual report, DMGT stated: "Mr Dacre has a rolling two-year contract which the [remuneration] committee considers wholly appropriate for his particular responsibilities ... The committee differentiates between what might be termed 'corporate executives' and 'media executives' whom it wishes to ... prevent from working for competitors. Mr Dacre is a media executive, whereas Messrs Sinclair and Williams are corporate executives, operating in a market where one-year contracts are increasingly the norm."
The ABI said that none of the members of DMGT's remuneration committee was appropriately independent. It is chaired by Lord Rothermere, the company's chairman, which is against best practice. The other two members of the committee, non-executives Marius Gray and Ian Park, were not considered independent by the ABI. DMGT simply said that both men "act independently as regards remuneration".
Finally, the ABI came out against DMGT's long-term incentive plan for executives because, although this scheme operates over five years, if its performance criteria are not met, directors are entitled to extend it by another two years.
The newspaper group holds its annual meeting next week but there is no chance of it being defeated - Lord Rothermere holds a majority of the shareholder votes.Reuse content