BT and C&W face top pay revolt

Britain's largest fixed-line telecoms groups, BT and Cable & Wireless, will this week become the latest members of the FTSE 100 to suffer a bloody nose over generous payments to executives.

Cable & Wireless, which has faced an annual shareholder rebellion over its pay awards since 2006, will once again face down angry investors at its first annual meetings as two separately-listed companies – C&W Communications and C&W Worldwide

Shareholder groups including Pirc and the Association of British Insurers (ABI) have issued alerts over executive remuneration packages.

Pirc said: "Remuneration is an issue at Cable & Wireless. Pirc is concerned by the presence of Sir Richard Lapthorne, chairman of the board, on the remuneration committee.

"Sir Richard is not considered independent upon appointment due to his previous executive duties and his participation in performance-related share award incentive plan. We believe that his presence on the committee represents a potential conflict of interest and undermines the independence of the remuneration setting procedure."

Tony Rice, chief executive of C&W Communications, saw his pay rise £100,000 to £700,000 following the demerger. Tim Pennington, finance director, is to collect £500,000 a year in basic pay compared with £400,000 previously. Both executives will also be eligible for a bonus of up to 150pc of their salary.

Senior managers of both companies are also set to continue to receive generous bonus payments through C&W's controversial private-equity style incentive scheme. The long-term incentive plan (LTIP) paid out £32m to senior managers last year.

Cable & Wireless suffered one of the biggest shareholder rebellions last year when 38pc of the shareholder register failed to back the company's pay policy at a fiery meeting.

A spokesman for C&W Communications said: "We're surprised by Pirc's objection, as our remuneration arrangements are based on a lower risk and reward structure than previously under Cable & Wireless plc."

BT could also face an embarrassing investor backlash against a £1.2m bonus payment to its chief executive, Ian Livingston. The ABI has put an "amber alert" on the former state-owned telecoms monopoly and warned its members to think carefully before approving director's pay packages at its annual meeting on Thursday.

Source: The Telegraph, 17th July 2010

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