Cable & Wireless' executives are to be offered financial incentives worth £220m to put the struggling telecoms company back on track.
In a letter sent to shareholders this weekend, C&W's chairman, Richard Lapthorne, proposed paying the heads of the company's two divisions £22m each in bonuses over the next four years if they meet various share price and operational targets.
John Pluthero, who joined C&W when it bought rival Energis last year, runs the beleaguered UK division, while Harris Jones runs the company's international operations. They will receive pay increases, taking their basic salary to £600,000 a year.
Bonuses of £176m will be shared between 60 managers across the group, worth almost £3m per manager if shared equally. It is the type of incentive scheme that private equity companies use to encourage staff to outperform.
C&W shareholders might balk at the need to stump up £220m in cash to encourage staff. Over the past six years, C&W has veered from one crisis to the next and has yet to prove that its struggling UK business will emerge as a strong competitor to BT.
The shares closed at 100p on Friday, down from their £15 peak in 2000. To receive bonuses, the stock must hit 220p, while the value of the UK and international divisions must rise at about 8 per cent a year.
Mr Lapthorne will not participate in the scheme. Tony Rice, the group managing director, and George Battersby, the group human resources director, will receive sharp pay increases and be eligible for bonuses worth £8.5m and £5m respectively.Reuse content