Sky bonuses linked to new dish sales

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The Independent Online
BRITISH SKY Broadcasting, the satellite television group, is planning to drop its controversial bonus scheme in favour of a long-term incentive plan for senior management linked to sales of digital satellite dishes.

If the scheme pays out in full, half-a-dozen senior BSkyB executives, including chief executive Mark Booth and the managing director of Sky Networks, Elisabeth Murdoch, will share in a payout of 3.5 million BSkyB shares, worth pounds 15m at yesterday's closing of 430p.

In a proposal to be put to its annual meeting on 30 October, BSkyB proposes the introduction of a three-year incentive plan linked to "long-range business measures derived from the company's business plan" and share performance relative to other British media and telecoms groups.

The move reflects Mr Booth's determination to concentrate BSkyB management on building long-term value rather than short-term profits.

The plan's targets, described by one insider as "demanding", are specifically linked to the number of subscribers BSkyB signs up to its new digital satellite service, launched at the start of the month. BSkyB's forecast is that it will have 6 million subscribers by 2003.

The plan replaces a controversial bonus package, dating from BSkyB's flotation in 1994, under which 1.5 per cent of annual profits was divided up between senior executives.

In the year to last June, Mr Booth received pounds 562,000 from the scheme, while Sam Chisholm, his predecessor as chief executive who is still on the payroll, received pounds 1.12m.

However, Sky insiders said Mr Booth felt the scheme discouraged executives from investing in the company. "If the advertising director asked for an extra pounds 10m on his budget, it would cut the chief executive's bonus by pounds 25,000," one said. "The new scheme is linked to long-term performance so it is more closely aligned to shareholders' interests."

Other directors benefiting from the plan are likely to be Martin Stewart, the finance director, Ian West, head of Sky Entertainment and Sky Sports chief Vic Wakeling.