Investors have slammed the complex pay awards for directors of Misys, the FTSE 250 software company.
Digesting a remuneration report is never for the faint- hearted. But the National Association of Pension Funds, which represents firms running more than £600bn worth of investments, has singled Misys out for criticism. It has advised its members to withhold support for the remuneration report at the company's annual general meeting on Tuesday.
"The complexity is such that many shareholders are unlikely to have the time or stamina to work through the information provided, and even then may not achieve a complete and accurate picture of the executive directors' remuneration," says an NAPF report. "The quality of this presentation is one of the worst encountered in the FTSE 350 and Misys needs to do much better in future if it wants to include the statement that it 'adheres to the principles of good governance' in next year's report."
Misys' remuneration report runs to 11 pages of its annual report. Directors received a total of £3.7m in 2003, more than double the figures for 2002. Executive chairman Kevin Lomax received a £715,848 package, up from £413,765 the year before.
Misys says part of any bonus should be paid in shares to motivate executives, but three directors received cash bonuses totalling £542,321 without any explanation.
The NAPF also highlights changes to performance targets for one type of share option, the reasons for which have not been explained. Shareholders cannot vote separately on these proposals.
Misys has revised part of its long-term incentive plan, but shareholders were not given a chance to vote on this. The NAPF also says it is not clear why three new executive directors were given two different types of share option.
Misys did not return calls for comment.
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