House of Fraser faces revolt over executives' share options

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The Independent Online

House of Fraser, the department stores group at the centre of renewed bid speculation, will face criticism from shareholders at its annual meeting this week over its plans to renew a controversial share option scheme.

House of Fraser, the department stores group at the centre of renewed bid speculation, will face criticism from shareholders at its annual meeting this week over its plans to renew a controversial share option scheme.

Pirc, the pensions industry consultants, has called on investors to oppose the scheme, lambasting the company for its lack of transparency. "Shareholders are asked to approve the scheme with no details of any performance targets that may be applied," it said.

House of Fraser is seeking shareholder approval at its meeting tomorrow for an options scheme that could give its executive team more than double the recommended payout.

Corporate governance guidelines suggest that an individual should receive options with an aggregate exercise price of a maximum of four times salary over any 10-year period. House of Fraser's scheme set an additional limit of 100 per cent of pay annually, giving its directors potentially two-and-a-half times as many options. A spokeswoman for the company said it had "no current plans" to use the scheme, but wanted to "keep its options on options open".

Investors may also query the 33 per cent pay rise awarded to John Coleman, its chief executive. His total remuneration last year was £772,817, representing 4 per cent of the group's £18.6m profits before tax.

Shire Pharmaceuticals, which emerged last week as the company that had the worst value for money chief executive in 2003 according to the Independent's survey of executive pay, is likely to face a shareholder revolt over its remuneration report. Pirc called on investors to oppose the report on the grounds that it grants "potentially excessive rewards."

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