Cable & Wireless Communications (CWC) was forced to face down investor unrest yesterday as more than a fifth voted to scrap senior management's pay packets.
The telecoms group held its annual meeting at the Queen Elizabeth II conference centre in London, at which 21 per cent of its shareholders voted to reject the remuneration packages proposed for the managers of the newly independent group.
A spokesman for CWC said that the 78.9 per cent of votes for the remuneration report showed "good support," adding: "Our remuneration arrangements are based on a lower risk reward structure that was previously the case at Cable & Wireless. It is focused on delivering value and is strongly aligned with the interests of shareholders."
Sources close to the group said the dissent would not lead it to change its long-term incentive plan, a scheme that had caused a shareholder revolt before Cable & Wireless split.
One industry analyst expressed his surprise at the resistance: "That was more than I had anticipated. It does show the degree of investor frustration for a management – in both companies – who have rewarded themselves pretty nicely."
Tony Rice, CWC's chief executive, saw his pay rise to £700,000 after the split, and his bonus could be worth 150 per cent of his salary.
Yesterday's resistance did not come as a surprise to the company, after shareholder groups last week issued concerns over CWC's pay policy and the proxy votes indicated the extent of the disquiet.
During the meeting, one shareholder confronted the board over pay. He criticised chairman, Sir Richard Lapthorne, for earning more "in a week" than he did in a year. Yet there were no formal questions on the company's pay structure.
Pirc said last week that "remuneration is an issue at Cable & Wireless," and particularly focused on the role of Sir Richard. "Sir Richard is not considered independent upon appointment due to his previous executive duties and his participation in performance related share award incentive plan," it said.
The Association of British Insurers also gave signalled its concern over CWC with an "amber topped" report, which particularly focused on the pay of finance director, Tim Pennington, from £400,000 to £500,000. He could also earn a further 150 per cent of salary through his bonus.
This came as Cable & Wireless Worldwide, the other arm of the business passed its remuneration package with over 90 per cent shareholder support despite a shock profits warning the previous day.
The analyst said: "I'm surprised CWW didn't face a bigger shareholder backlash especially after Tuesday."
CWC also released its first quarter numbers yesterday as well and said it had "started the year well".