Top companies 'weighed down by options'

At least 10 of Britain's largest companies offer share-option schemes to employees and directors so generous that they potentially account for more than a 10th of their market value, a survey revealed.

The finding, from the corporate governance consultancy Institutional Shareholder Services (ISS), highlights the pressure companies are under to lock in senior staff with generous schemes.

BAE Systems, the aerospace giant, tops the list of generous payouts, with a scheme that is worth 19.5 per cent of its market capitalisation, if all options are taken up and exercised, ISS said.

Standard Chartered, a bank, and AstraZeneca, a drugs company, come in at only slightly less, with share-options packages that are potentially worth just more than 17 per cent of the value of the companies.

Share options have come into the spotlight in recent months due to mounting pressure on companies to count them as an expense in their financial results in order to increase transparency. The move would hit profits and may encourage companies with particularly lavish schemes to scale them back.

Under regulatory changes, UK companies will be forced to count share options as an expense by 2004 but a few have decided to do so ahead of time. HSBC was unusual in this week saying it would probably move over to the new system later this year.