Capital shareholders back controversial bonus deal

The management of Capital Radio got a controversial share options incentive scheme past the annual general meeting yesterday, allowing senior executives to collect multimillion-pound bonuses.

The scheme had angered some major shareholders, and the National Association of Pension Funds, which had ordered its members to abstain from supporting the package at the AGM.

The new arrangement for executive directors raises the limit on options that can be awarded from 75 per cent of a director's basic salary to 110 per cent. The scheme will also give senior executives the ability to decide how much they could cash in if the business was sold. Shareholders fear Capital is a prime takeover target once the Communications Bill, which will free up takeover opportunities in the sector, passes into law later this year and executives will enjoy golden parachutes if they sell the company.

But yesterday management secured support from 80 per cent of shareholders for the scheme, although 11 per cent voted against the proposals.

In a trading update issued for the AGM, there was some cheer for investors, after the group revealed advertising revenues for January will be "modestly up" on 2002.

Shares in Britain's largest commercial radio group gained 5.5 per cent to close at 430p on news that group radio revenue was down only 6 per cent in the last quarter. Analysts had feared the losses would be worse. October proved tough, with sales down 14 per cent, but November and December were broadly flat on 2001.

There was, however, little optimism from David Mansfield, the chief executive, who said: "The outlook for February and March is more uncertain. We continue to manage on the assumption that the advertising market remains under pressure for the rest of the year."

More bad news for Capital is expected next week when listening figures for the last quarter are published. Richard Menzies-Gow, of Dresdner Kleinwort Wasserstein, said: "Yesterday's numbers do not yet indicate any severe pressure following the disastrous last set of audience figures. However, increased marketing efforts by Capital will not yet have impacted these numbers and potentially we could see a further decline."

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