View From City Road: Pay rebellion shows results

The recent uproar over directors' pay and perks is at last having an effect. In their different ways Richard Peskin, Sir Colin Marshall and Frank Law each gave encouraging evidence yesterday that change was under way. But shareholders cannot yet afford to relax the pressure.

Mr Peskin promised to review the unusual arrangements whereby his private company is paid handsomely for managing the properties of Great Portland Estates, where he is both chairman and chief executive. The review, which is long overdue, may not result in much change but at least it reveals a welcome sensitivity to the issue.

Sir Colin Marshall, already battered by the British Airways dirty tricks affair, has switched overnight from a rolling contract to one of fixed length. Let us hope this is not just a sop to appease investors worried about relations with Virgin.

And Aegis, where Mr Law is chairman, has also tightened up its contracts, and sold its executive jets, although, sadly, not before paying pounds 2.25m compensation to Peter Scott, the former chairman. Still, better late than never.

Excesses still abound, however. The team from Cray Electronics has helped to build a successful business but the same job could surely have been carried out for less than pounds 40m. Most people would think pounds 10m more than enough compensation. Why was their incentive not capped at this level?

The Cray case illustrates why shareholders have a direct financial interest in the way directors are paid. Some - notably Postel, which manages the Post Office and BT pension funds - had objections at the outset but most failed to speak up at that stage. While they too have benefited from Cray's progress, as the share price has risen, they have not gained proportionately as much as the lucky foursome.

The four cases also reveal a switch of focus from levels of pay - although these still occasionally make headlines - to structures of pay. Shareholders need to know a company's liabilities if a director is forced out just as they need to know how much to pay a successful chief executive.

As yet, few exercise their rights to examine service contracts, which are available before annual general meetings. Instead they want companies to disclose more contractual details in annual reports. This saves them the trouble of going to the companies' registered offices.

Some companies - including Grand Metropolitan, Cable & Wireless and Boots - have responded to these requests with more facts. But most are still reluctant. Woe betide any that continue to hide behind traditional excuses such as exemptions for overseas directors, competitive secrecy and privacy. They will be suspected of hiding something.