and JOHN MURRAY
The country's biggest institutional investor yesterday warned highly paid directors at British Gas that they now have to "deliver".
Hugh Jenkins, head of Prudential Portfolio Managers, the largest shareholder in the privatised utility, said he was not consulted about the 75 per cent pay package awarded to Cedric Brown, chief executive of British Gas.
Mr Jenkins told the Commons employment committee that Prudential had requested "a little more of the background" from the gas company and had accepted the explanations.
He said that the British Gas chief's pay of £475,000 was "not over-generous". He added, however: "It is up to the company now to deliver performance."
In a submission to MPs, Prudential said it was championing the need for "performance requirements" before share options could be exercised.
The "man from the Pru", whose own £270,000 basic salary can be enhanced by a further 45 per cent, said Mr Brown's remuneration seemed to be in line with market practice for a company of that size.
Hugh Stevenson, chairman of Mercury Asset Management, the second-largest investor in British Gas, said he would support legislation to enforce disclosure of directors' salaries if this could not be achieved voluntarily.
Alastair Ross Goobey, chief executive of PosTel Investment Management, said he was not looking for restraint from senior directors of public companies, but investors should expect leadership.
Institutions should use their votes to curb excesses, he said.
Meanwhile, it emerged that directors of BAT, the tobacco and financial services giant, reduced overall boardroom pay last year, although some executives still received substantial increases. Total bonuses fell by £1m to £700,000 as profits across the group remained flat.
The biggest loser was Leo Denlea, the American who runs Farmers, BAT's US insurance subsidiary. His total pay halved to £591,000.
But Martin Broughton, the group's chief executive, saw his pay rise from £475,430 to £603,028 on the back of a £176,000 performance-related bonus.
The remuneration of David Allvey, finance director, jumped by more than £60,000 to £403,993 after a £101,500 bonus.
Eagle Star and Allied Dunbar chairman, George Greener, was the highest- paid director. He received £703,261, although his package has dropped from £776,079 in 1993.