Rebels urged to vote against £2.9m pay package at Schroders

The Asset management house Schroders is set to be the next company to fall foul of the corporate governance lobby when it puts a £2.9m pay package for its chief executive, Michael Dobson, to the vote at its annual general meeting later this month.

The heavyweight National Association of Pension Funds (NAPF) has advised institutional shareholders to vote against Schroders' remuneration report and is also calling on them not to support the re-election of two directors at the meeting on 23 April.

Mr Dobson, who joined Schroders in 2001 to revamp the business, is entitled to a minimum cash bonus every year until 2004 of £1.8m. He will also receive shares worth £1.5m and a basic salary of £200,000.

The Association of British Insurers has labelled Schroders as "amber", indicating to its members that they should think carefully about whether they want to endorse the payouts. PIRC, the shareholder lobbying group, is also likely to oppose a number of Schroders' resolutions. A spokesperson said: "In general we do not like guaranteed payments."

The NAPF is also recommending that shareholders withhold their support on the re-election of Bruno Schroder, the former investment bank's main family representative.

Mr Schroder, 70, is seeking re-election as an independent non-executive director, a post the NAPF says he cannot fulfil because of family connections. The body has also told shareholders to abstain on the formal vote to elect Richard Horlick, who joined the board in January, because Schroders has not given enough details about the terms of his contract.

The NAPF said in its voting advice circular to shareholders that its main concern is the fact that the Schroder family controls 47 per cent of the company's voting shares. "The corporate governance issue continues to be the company's share capital structure," the NAPF has said.

Schroders defended its corporate governance regime, pointing out that Mr Dobson actually only received £949,000 of shares because their value fell last year.

"A substantial element of Michael Dobson's package is in Schroder shares, thereby aligning his interests with those of shareholders," a spokesperson said.

The list of companies that have been given a rocky ride at shareholder meetings over hefty payouts, and their management track record, is growing. Reuters is set for a series of protest votes at its AGM on 17 April and Carlton Communications, Granada and Reed Elsevier have already had to defend their records.

The new levels of attention have been partly prompted by the fact that companies have for the first time this year been forced to put their remuneration reports to a vote at AGMs, though the outcome is not binding.

But outrage has also been sparked by the fact that some companies have continued to award their executives' bumper pay packages despite slumping share prices and forced lay-offs of staff.