The Smith Group is considering freezing the salaries of senior staff and offering them shares in the company for successfully overcoming challenges.
Under the engineering firm’s new remuneration scheme, proposed by chief executive Philip Bowman, executive directors would not receive pay rises for a period of two years and would no longer be granted awards under the existing performance share plan.
A new one-off long-term incentive plan would be introduced, comprising of different arrangements for executives with group-wide responsibilities and divisional responsibilities. The plans would enable participants to share on surplus value created by overcoming a hurdle.
Annual bonus opportunities will also be increased by half, and if the plans go ahead, staff will be required to invest one half of any bonus into a Co-Investment Plan – a share matching arrangement under which executives may qualify for free matching shares after three years.
The proposed changes to remuneration have come out of a review of the group’s operations during 2007, which looked at ways to improve the operating performance of the business through stronger revenue growth.
A consultation of the plans are being conducted with shareholders and will be discussed at the firm’s extraordinary general meeting held today (28 July).