The revolt comes amid mounting concern over the size of rewards available to company executives under new long-term incentive plans intoduced to comply with the Greenbury rules on boardroom pay. In many cases, executives stand to double their basic pay.
The main beneficiary of Thorn EMI's Senior Executive Incentive Plan would be Jim Fifield, the US-based chief executive of the EMI record business, who earned pounds 7.38m last year and is nicknamed "Lucky Jim" in the City.
Under the scheme, executive directors are entitled to bonuses worth up to 180 per cent of their base salary, provided certain financial targets are met. Mr Fifield, who earlier this year signed a record-breaking pounds 8m recording contract with singer Janet Jackson, would have netted pounds 3.46m had the scheme been in operation last year.
Thorn EMI's chairman, Sir Colin Southgate, who earned a basic salary of pounds 506,000 last year, would have received a bonus of pounds 708,000.
The controversial scheme, which has angered leading institutional investors, will be put to shareholders next Friday when they vote on the proposed demerger of Thorn EMI into two separate companies - EMI, which includes the record company and HMV record shops, and Thorn, the television rentals business.
The Pensions Investment Research Consultancy (Pirc) which advises 40 pension funds, with assets of more than pounds 100bn, said it would be urging its clients to vote down the scheme. Alan McDougall, joint managing director of Pirc, said: "The new scheme does not conform to our guidelines as to what is appropriate based on the targets the company has set to trigger these bonuses."
Pirc added that it objected to the way shareholders were being asked to vote on one resolution which sought both to amend the existing executive bonus scheme and introduce the new one.
The recommendations of the Greenbury Committee were designed to stamp out abuse of share option schemes, particularly in the privatised utilities. Scores of executives in the regional water and electricity companies have made fortunes out of share options granted at the time of privatisation which then rocketed in value as the businesses were taken over.
Share options were supposed to have been phased out and replaced by the new long-term incentive plans (L-Tips). But according to a report by the executive pay consultancy Monks Partnership, only 29 of Britain's top 100 companies have scrapped share options.
The study found that 75 of the top 100 had introduced L-Tips. But in many cases these have run into flak because of their generous nature, the undemanding financial targets set for executives and the complexity of the schemes.
One institutional investor said that the EMI scheme was largely incomprehensible, but from what he could understand, it appeared that "these guys are going to the moon".
United Utilities, the company formed out of the merger of North West Water and Norweb, survived a shareholder rebellion over its new incentive plan a week ago, but only after a third of investors voted against the scheme.
The scheme entitles United Utilities' chairman, Sir Desmond Pitcher, and the chief executive, Brian Staples, to receive bonuses worth 87.5 per cent of their basic salaries. This year, Sir Desmond's basic salary has been increased by pounds 54,500 to pounds 310,000 and Mr Staples' by pounds 65,000 to pounds 300,000.
At Railtrack, the chairman, Bob Horton, stands to double his pounds 125,000 salary under its new L-Tip while directors of National Power can expect long and short-term bonuses to increase their pay by 50 per cent in return for "solid" performance.
Lord Blyth, chief executive of Boots and one of a handful of British directors paid more than pounds 1m, stands to earn a bonus worth 90 per cent of his basic pounds 470,000 salary.
What has unsettled institutional shareholders and outraged small investors is that many of the new incentive schemes come on top of other perks.
The chief executive of British Gas Energy, Roy Gardner, received a "golden hello" of pounds 200,000 to compensate him for leaving GEC and the new chief executive of National Power, Keith Henry, got pounds 100,000 on joining.
At United Utilities, Mr Staples received a one-off bonus of pounds 48,000 last year for the "exceptional burden" of taking over Norweb, lifting his total pay to pounds 380,700.
Top earners: how much they get
Sir Desmond Pitcher, chairman, United Utilities. Age: 61. Pay: pounds 346,000.
"King Des", as he is known in the north-west, masterminded the pounds 3bn merger of North West Water and Norweb to create the country's first super-utility. A former chief executive of the Littlewoods Organisation, he is an engineer by training. Current posts include deputy chairman of Everton Football Club and chairman of Merseyside Development Corporation. Well-connected politically, and an occasional adviser to John Major.
Lord Blyth of Rowington, chief executive, Boots. Age: 56. Pay: pounds 1.175m.
The Government's former chief arms salesman (head of defence sales at the MoD, 1981-85) he joined Boots in 1987. After a disastrous acquisition spree, he is credited with turning the business around. Current posts include chairman of the Prime Minister's advisory panel on the Citizen's Charter and governor of London Business School. Lists skiing, tennis and painting among his recreations.
Bob Horton, chairman, Railtrack. Age: 56. Pay: pounds 159,000.
Not a big earner by today's standards, but consoled by pounds 1.5m pay-off he got from British Petroleum in 1992. Arrogant, but also charming, he once said: "Because I am blessed by my good brain I tend to get the right answer quicker and more often than most people." Paid for that remark with his job at BP, but has since bounced back. Holds four other non-executive directorships but likes to get out into the country when not on Railtrack business.
James Fifield, chief executive, EMI Music. Age: 54. Pay: pounds 7.38m.
Makes the kind of money earned by the pop stars he has handled, among them Mick Jagger, Janet Jackson, Blur, and the Beatles. Reputedly the highest-paid director of a British company, the Missouri-born businessman joined Thorn EMI in 1988 after a career in the toy, food and video industries. Will get a pounds 12m "golden parachute" if EMI is taken over after it demerges from Thorn next week. Maybe that's why the City nicknames him "Lucky Jim".Reuse content