C&W to endorse more private equity style incentives

A vote on executive pay at FTSE 100-listed communications company Cable & Wireless is set to remove a £20 million cap on the pay of the heads of its UK and international businesses and provide a substantial incentive package for chairman Richard Lapthorne.

UK telecoms company Cable & Wireless is set to vote today for further enhancements to its private equity-style incentive schemes for senior executives.

The revised packages are expected to receive the backing of Newton, Standard Life Investments and Hermes, the company’s three largest investors, according to a company spokesperson.

Under the proposals, which are designed to provide substantial incentives for good performance, chairman Richard Lapthorne could net as much as £11 million in shares if the company’s total shareholder returns are in the top 10 per cent of the FTSE global telecoms index over the next three years. They would also see the abolition of the current £20 million salary cap on John Pluthero and Harris Jones, respectively the heads of the UK and international businesses.

Last year the management pushed through a controversial private equity-style incentive scheme, whereby a group of about 60 senior managers would share a reward pot of up to £216 million if the company’s share price hit 228 pence by 2010. So far the scheme seems to have had the desired effect – at the time shares were trading at just over 100 pence but they have almost doubled in the subsequent year, partly due to ongoing takeover speculation.

The spokesperson said: “We’re a turnaround business and we believe the private equity-style proposals will drive performance. We’ve nearly doubled our share price in the last year so the change is justified.”