Capital Radio defies investors in bonuses row

Capital Radio yesterday vowed to press ahead with a generous new pay package for its top management, despite a warning from the National Association of Pension Funds that it had advised its members not to support the scheme. Capital is set for a rocky ride at its AGM next Thursday after the influential body of institutional shareholders circulated a directive this week pressing members to abstain on a number of key votes.

Capital is proposing that executives should be able to have their options package increased from 75 to 110 per cent of salary. It has no plans to change the rule that options are granted if earnings growth exceeds certain benchmarks in any three-year period.

The NAPF said: "On principle, we do not feel it appropriate to support an increase in award levels without an equivalent move to make performance conditions comply more closely with what is today considered acceptable by institutional investors."

Capital is to press ahead with the pay award, saying the NAPF has called its corporate governance "satisfactory".

Separately, Capital's shares fell to a near five-month low, closing 4 per cent down at 447.5p, due to market fears it would unveil weak advertising sales.