Greenbury has had `little impact'

Just 10 per cent of companies have changed their policy on directors' employment contracts since the 1995 Greenbury report on executive pay, the shareholder advisory consultants, Pirc, claimed yesterday.

In its response to consultation by the Hampel Committee on corporate governance, the successor to the Cadbury Committee headed by ICI chairman Sir Ronnie Hampel, Pirc argued investors had been baffled by a "blizzard of statistics" following the Greenbury codes call for business to publish more information about directors' pay.

The Pirc submission added: "There has been an explosion of detail declared on remuneration, but little direct impact from shareholders in linking pay to performance."

It criticised the "fruit machine effect" of recently introduced long- term bonus schemes (L-Tips), which claim to link share payouts to executives' performance but in reality "deliver arbitrary results". This year many L-Tip schemes will start paying out large sums in shares to directors, often above the straightforward share option plans they replaced.

Pirc said big City shareholders were still not taking the opportunity to influence companies' policies by voting on resolutions at annual general meetings. The group argued that institutional investors should be required to make their voting policy public.

The Pirc proposals emerged as British Gas released its annual report, which showed the pay of its directors fell by 11 per cent last year to pounds 3.04m. The report confirmed most senior directors received average pay rises between 3 and 5 per cent from 1 January, information which was made public when the group, now renamed BG Plc, demerged last month.