 |
| |
|
|
OneFootInTheGrave
|
 |
Kuzelj
Nov 2000
time: 05:27
|
|
quote:
The scandal of the so-called rewards-for-failure culture, with huge pay-offs being made to bosses of ailing companies, is set to end.
Amid mounting fury at the spectacle of boardroom fat cats walking away with millions from 'golden goodbye' deals, The Observer can reveal that the Government is planning to bring in measures that could lead to pay-offs being capped at six months' salary.
With investor disgust at seven-figure salaries and pay-offs going to directors of poorly performing companies, Trade and Industry Secretary Patricia Hewitt is finalising a paper on executive excess, which will be published within a fortnight.
Last week Hewitt said there was 'an entirely justified fury' among shareholders who have seen their investments slashed while poor company performance is rewarded with huge salaries and perks for the executives.
Hewitt will set out several measures in her Reward for Failure paper, including:
· Cutting the length of company director contracts from a year to six months, which will reduce the amount they can receive when they leave;
· Linking pay-offs for directors to their performance, regardless of what they have negotiated in their contracts;
· Paying out compensation to directors in stages, to prevent them pocketing huge sums before walking straight into another job;
· Inserting performance criteria into contracts.
Her plans come amid the most acrimonious season of company annual meetings in living memory.
In the past fortnight a succession of mutinies among pension fund managers have greeted company plans for directors' pay, bonuses and contract arrangements, with previously cautious investors voting in unprecedented numbers against the recommendations.
A total of 23 per cent of shareholders voted against resolutions at Shell's AGM, where chief executive Sir Phil Watts was lambasted for the 55 per cent rise in his salary last year - taking it to £1.8 million - which accompanied a fall of more than a quarter in the company share price.
Meanwhile Schroders chief executive Michael Dobson received £2.9m despite a similar share slide, while one Barclays shareholder questioned how Matt Barrett, its chief executive, could be worth 10 High Court judges (the value of his £1.7m package).
Hewitt's chief concern is over pay-offs for bosses who leave companies after they have failed. This is reflected in investor votes, which companies have had to hold for the first time under regulations brought in this year.
Shareholders voted against Schroders and Barclays not simply because of the huge sums being paid but because of the terms on which they are granted. Barrett, for example, is entitled to two years' salary if the company is sold rather than one.
Pay-outs are made regardless of whether the director has been a success or a failure - earlier this month it emerged that Royal Sun Alliance chief executive Bob Mendelsohn departed with £1.44m - about 18 months' pay - after he was pushed out of the company last year.
Adam Singer of Telewest, Ken Berry of EMI and John Mayo of Marconi all left with multi-million-pound pay-outs despite leaving their companies in trouble.
Plans to limit directors' contracts would be relatively simply achieved by reducing the length of time recommended in the bible of company best practice known as the 'Combined Code'. A government recommendation would set a new benchmark, and companies that did not comply would have to 'name and shame' themselves at their annual general meeting.
Linking pay-outs to performance would probably require legislation, and Department of Trade and Industry officials are including measures set out by Conservative MP and former Asda boss Archie Norman in a Private Member's Bill 'to take the respective director's performance into account in setting the amount of any such payment'.
A DTI source confirmed that the plans were being drawn up and that the consultation paper was likely to be published within the next two weeks; Hewitt is likely to finalise measures by the autumn: 'We are finalising it now, and expect it to be published shortly.' |
http://www.observer.co.uk/business/...,944468,00.html
well what to say other than that was long overdue 
|
|
| |
|
| |
All times are GMT. The time now is 05:27.
Apolyton Time is 00:27. |
top of page
|
| archivepost |
|
Forum Rules:
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
|
HTML code is ON
vB code is ON
Smilies are ON
[IMG] code is ON
|
|
|
|
|
|
28-04-2003 01:59
|