Union anger at new Corus bonus scheme

The loss-making steel producer Corus disclosed yesterday that it has redrafted its executive bonus scheme so that payments no longer depend on the company achieving pre-determined profit targets.

Under the new scheme, outlined in the company's latest annual report, the payment of bonuses will depend on performance against "financial operating targets and personal operating objectives". The scheme will also pay out up to 60 per cent of base salary whereas the old one paid a maximum of 50 per cent.

Unions reacted with outrage to the new bonus scheme which comes just weeks after Corus warned that it would have to cut thousands more UK jobs to stem losses which reached £446m last year.

Michael Leahy, general secretary of the main steel union, the ISTC, said he thought Corus was playing an April Fool's joke. "The company has underperformed on the stock market and not made a profit so the directors have not received any bonuses. So what do the remuneration committee propose? The scheme must be changed so that directors can potentially receive an increased bonus no matter whether the company makes a profit. What planet are they living on?" Mr Leahy said.

He said that even though the company had ousted Tony Pedder, its chief executive, and seen its share price plunge by 90 per cent, it had decided to insulate its directors from failure.

Corus paid no bonuses last year because of its heavy losses, nor did executive directors receive a pay rise with the exception of the finance director, David Lloyd.

Mr Pedder's pay rose by 32 per cent from £434,000 in 2001 to £571,000. However, in 2001, he was only chief executive for four months of the year. He was on a one-year contract and is expected to receive a pay-off worth £550,000. Mr Pedder also has a company pension worth £203,720 a year. By the end of 2002, the transfer value of his pension had risen to £2.33m.

Sir Brian Moffat, the Corus chairman, who has temporarily stepped back into the chief executive's role, saw his pay fall from £580,000 in 2001 to £269,000. However, his salary will go back up this year because of his executive duties.

Under the new bonus scheme, two-thirds will be paid in cash at the end of the year. The remaining one-third will be paid in shares and deferred for three years.