DFS Furniture yesterday staged an 11th-hour U-turn by scrapping plans to extend its share option scheme after shareholders objected.
The furniture retailer said a specific resolution regarding the scheme, which was to be tabled at today's annual general meeting in Doncaster, had been withdrawn "as a result of shareholder concerns".
Lord Kirkham, DFS's chairman, said the company would now consult its shareholders and relevant representative bodies before submitting a new proposal. DFS had proposed that executives be awarded options worth double their salary in the first year, with reviews on a yearly basis. The scheme would have replaced its current plan, under which executives can be awarded options worth up to four times their salary once every three years.
However, the Association of British Insurers objected to the change on the grounds that it did not include any tougher performance targets other than the existing condition which stipulates that earnings per share should rise faster than inflation.
The ABIwelcomed DFS's decision to withdraw the resolution. "We're very pleased by the decision. We had been concerned that they had substantially altered their share option scheme without taking into account or altering the performance targets," an ABI spokesman said.
Lord Kirkham said DFS had wanted to extend its scheme "simply because we had outgrown the existing scheme" that had been created when the company was floated back in 1993.
"Our objective was to ensure that we could continue to offer options to all our department heads, area managers and store managers as the business expands," he said.
The company denied the amended scheme had been proposed purely to reward directors, saying that under its existing scheme, some 84 per cent of options are held by managers below board level.Reuse content