Directors' pay rises anger Arjo investors

COB STENHAM, the chairman of Anglo-French paper group Arjo Wiggins Appleton, will come under fire from irate shareholders this week over a massive salary rise given to him and another non-executive director.

The 61-year-old former finance director of Unilever is expected to face questions from shareholders at tomorrow's annual meeting over the level of his salary package and the creeping control of the group by St Louis, the French food and paper company that is Arjo's largest shareholder.

Mr Stenham received a 46 per cent pay increase to pounds 307,000 and 158,000 extra share options last year, while Arjo's profits fell 30 per cent.

At the same time Bernard Dumon, a non-executive director and chairman of St Louis, saw his salary from Arjo treble to nearly pounds 50,000. Mr Dumon is paid three times as much as any other non-executive at Arjo.

It has also emerged that the group's chief executive, Stephen Walls, who resigned last year, received a payoff of pounds 775,000.

Mr Stenham has been given his salary increase even though it has not been officially decided whether he is an executive director of the company. In the company's accounts, he lists seven other directorships, including the deputy chairmanship of VSEL Consortium and a non-executive directorship of Worms et Cie, the French investment group that owns 45 per cent of the voting shares in St Louis, which in turn owns 39.9 per cent of Arjo. He receives pounds 5,000 a year from Worms for his directorship.

Arjo said Mr Stenham 'devotes more than half his time' to Arjo. The company has an office in London's St James Street, largely used by him, while most other head office functions are in Basingstoke, Hampshire.

Mr Dumon received a salary rise because he was elected to the executive committee of Arjo, despite being a non-executive. This elevation was opposed by some members of the board, and was one of the factors highlighted by Henry Wendt, chairman of SmithKline Beecham, for his decision to resign from the group last year.

Arjo said Mr Dumon's attendance at executive committee meetings was necessary because of St Louis's influence on the affairs of Arjo.

Shareholders have been concerned at the increasing influence exercised by St Louis. A disagreement about future strategy led to the departure of Mr Walls, who has become chief executive of Albert Fisher, the food group.

City analysts have said St Louis was behind Arjo's decision to cut its dividend last September, although Mr Stenham has maintained that the board was united about the decision.