Cable & Wireless’ proposal to remove its £20m cap on individual executive bonuses has been criticised by the Association of British Insurers (ABI).
The long-term incentive plan (L-tip), which was introduced in April last year, was given a cap to ensure that no individual employee could receive more than £20m through the scheme
The proposal to remove the cap has been recommended as being inconsistent with the objective of maximising shareholder value. Cable & Wireless will seek shareholder approval of the proposals at its AGM in July but the move has already been met with some animosity by the ABI. Peter Montagnon, director of investment affairs, said that there is not at present “much overall enthusiasm for these proposals. The cap which is to be removed was an integral part of last year’s carefully negotiated arrangement. Unfortunately there has not been time to complete discussions about the details, and shareholders will make up their minds in due course.”
Cable & Wireless has also announced plans to revise the contract of its chairman Richard Lapthorne, which could see him receiving an award of up to 5.5 million shares in three years’ time if the company’s performance is in the top 10% of the comparator group of companies in the FTSE Global Telecoms Index.
Clive Butler, senior non-executive director of Cable & Wireless, said: “The board considered it a priority to secure Richard’s continuing contribution to the turnaround and transformation of our business beyond his current fixed term.”