Cable & Wireless executives in bonus battle

Discord over multi-million pound bonus payouts is threatening to further delay Cable & Wireless's plan for a £3.6bn demerger.

Senior managers of C&W's international business are understood to be battling to delay the demerger because if it happens without a significant rally in the share price, they may miss out on about £30m-worth of bonus payments.

However, managers from C&W's UK division are pushing for the demerger to take place soon, as they are set to receive bonuses of about £30m on Friday's closing share price of 145p. C&W International managers will get little payment under the company's "value realisation plan" unless the shares exceed 166p, according to an analyst.

However, independent valuations which will determine the level of payment, are thought to be based on many other factors as well as share price.

The FTSE 100 company postponed plans to split the group last November because of falling equity markets. However, the group has said it would reopen its plans when market conditions improved. Analysts expect that C&W will set a date for the demerger when the company announces its first-half results on Thursday, but it is expected to be littered with caveats that could further delay the split.

In order for the managers to receive the maximum payout the demerger must take place before the company's full-year results next March. Whether the demerger goes ahead or not about, 30 C&W UK managers are set to share a long-term incentive plan (LTIP) of up to £30m next March.

John Pluthero, executive chairman of C&W UK, will collect about 20pc, or £6m, of the payout. It comes on top of the £8.3m Mr Pluthero collected in May as the company's 55 top managers shared a £32m bonus pool. Will Draper, analyst at Execution, said the payment will make C&W managers "among the best paid people in the UK".

Source: The Telegraph, 1st November 2009

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