Pirc, the corporate advisory body, yesterday ratcheted up the pressure on Cable & Wireless over the changes unveiled in May that could ramp up the rewards for the telecom giant's top management.
Ahead of Cable & Wireless's annual meeting on Friday, Pirc expressed concerns over the company's plans to extend the period of its long-term incentive plan from March 2010 to a year later. The telecoms company has cited the need to dovetail this scheme with awards of annual performance shares under the Cable & Wireless incentive plan 2001, which will vest from 2012.
But in a damning report, Pirc said the scheme was more akin to the private equity industry and recommended that shareholders vote against it. "The scheme, which we have opposed in the past, is a cash-based incentive of a type usually found in a private equity speciality finance company and is based on value realisation." Pirc's report follows a "red-top warning" from the Association of British Insurers last week, which contained similar criticisms.
The ABI has also taken umbrage at the reasons Cable & Wireless gave for extending the incentive scheme. In May, the telecoms company said the extension reflects the delay in our "value realisation timetable caused by the unprecedented turmoil in the credit and equity markets".
However, Marc Jobling, the ABI's assistant director of investment affairs, said that C&W was "moving the goal posts" because of the difficult market conditions, which shareholders would find "incredibly difficult to take". The ABI has also alleged that Cable & Wireless's share awards have not been based on actual salaries this year, but the "market rates".
A Cable & Wireless spokesman defended its reward policy yesterday. "We believe firmly that our executive incentive plans will deliver strong returns to our shareholders. Over the first three years of our long-term incentive plan, Cable & Wireless has achieved a 44 per cent total return to shareholders... compared with an average total shareholder return of -26 per cent for the FTSE 100." He added: "We have consulted widely with our major shareholders on our proposed plans earlier this year and received broad support."Reuse content