Pirc to savage utility perks

A leading City investment consultancy is planning a summer assault on privatised utility bonus schemes as it gears up for attacks on similar incentive plans being tabled by the Prudential and Hongkong and Shanghai Banking Corporation next week.

Pirc, the Pensions and Investment Research Consultancy which advises many of the largest City fund managers, is set to take the water and electricity companies to task over plans to reward their directors with long-term bonus and share schemes it regards as unacceptable under the terms of the Greenbury Report.

Many of the privatised utilities are set to hold their annual meetings in July when they will propose schemes that will result in windfall bonuses for performances Pirc sees as only average.

Pirc has already campaigned against 16 such schemes proposed by companies such as Shell and Inchcape, though shareholders have still voted in favour of them.

Pirc will call for polls to vote down the Pru and HSBC schemes when they hold their annual meetings on Wednesday and Friday respectively.

Pirc issued a statement yesterday criticising the HSBC scheme which it sees as the most outrageous to date.

Under the terms of the proposals directors could qualify for shares to the value of four times salary which would cost the company pounds 10m-pounds 16m if certain performance targets are met.

Pirc said the scheme included a "jackpot effect" rather than a graduated scheme. "If you meet the criteria the whole lot falls into your lap," Pirc's Anne Simpson said.

Pirc is holding a seminar next month to discuss more acceptable methods of rewarding directors. It wants to see arrangements that enable all staff, not only the directors to participate.

It criticised companies such as Grand Metropolitan and BOC for operating several share option and bonus schemes that are difficult for shareholders to understand.

Pirc was set up in 1986 and offers investment advice to 32 pension funds which include Sainsbury and British Gas, as well as six investment managers which control pounds 120bn of funds between them. Its income is derived from the fees for this advice.