Deutsche queries Wharf directors' pay

The pay of directors at Canary Wharf is the least tied to performance among large property companies, according to a research report.

Deutsche Bank compared pay rises and performance of the leading property companies, measured by total shareholder return or growth in net asset value (NAV). It found the increase in executive compensation in 2001 and 2002 to be least justified at Canary Wharf and London Merchant Securities, a much smaller property player.

Canary Wharf, the giant Docklands office development led by chief executive George Iacobescu, has received several bid approaches, worth about £1.5bn. Mr Iacobescu's pay made up half of total director pay at Canary Wharf last year.

Deutsche Bank said: "We found the compounded annual growth over the past two years in compensation to the directors at Canary Wharf and London Merchant Securities (of 30 per cent and 42 per cent, respectively) to be particularly puzzling.

"Both companies paid their directors 20-plus percentage points more than either the total return or NAV growth generated over the same period."

Analysts at the bank found that "most [property] companies tie their pay to size" of the business and "pay growth seems unrelated to performance". Last year chief executive compensation in the sector grew 17 per cent, far ahead of total return and NAV growth. "It is disappointing that the companies have generally chosen to ignore the pay for compensation policy."

Last year Mr Iacobescu made a total of £1.2m - compared with average pay among the top players of £679,000. The 2002 pay for Mr Iacobescu was up from £628,779 in 2001. The highest paid executive in the property sector was Patrick Vaughan at Pillar Properties.

A spokeswoman for Canary Wharf insisted that Mr Iacobescu's pay was tied to performance but that the criteria used was different to that employed by Deutsche Bank.