Trinity Mirror has bowed to shareholder pressure by halving any future cash bonus for its chief executive Sly Bailey, but it risked investors' wrath because it will not reduce the overall size of her controversial pay package.
The owner of the Daily Mirror announced the changes as the annual report showed that Ms Bailey earned £1.3m last year in pay and pension, including a £248,000 cash bonus, despite a 40 per cent plunge in profits.
The publisher is anxious to head off a revolt at next month's annual meeting and admitted it needed to "bring the company's long-term incentive arrangements more in line with the views of investors".
But it is not clear that the concessions – which mean Ms Bailey's pay will be skewed more towards long-term share performance – will satisfy shareholders. Alex de Groote, an analyst at Panmure Gordon, said the changes were "overdue and very welcome" and suggested Trinity's incoming chairman, David Grigson, had been an influence. But Mr de Groote warned that "there's a long way to go" for Trinity Mirror to convince the City.
Ms Bailey will see her potential cash bonus slashed from 110 per cent of her £750,000 base salary to 55 per cent. Her "maximum annual bonus" in cash and shares will fall from 176 per cent of salary to 110 per cent. But her potential long-term share awards, which are based on performance, will soar from 80 per cent of salary to 144 per cent.
Trinity conceded that the increased long-term bonus scheme would "offer broadly the same opportunity" as the cut in the annual bonus.
It will also keep Ms Bailey's base salary at £750,000. Critics say that is too high because the company has shrunk and her bonuses are linked to her salary. The shares have lost more than 90 per cent during her reign, reducing its stock market value to just £97m.
Trinity's five biggest shareholders are Schroders, Aviva, Standard Life, Royal London and Legal & General, and it is thought that at least one has voiced strong concern to the board.
Ms Bailey has also came under fire after Trinity postponed £69m of payments to reduce its pension deficit for three years as it wants to use the cash to pay off loans.
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