Schemes to attack M&S over share
options
Pension funds plan to attack Marks
& Spencer's (M&S) pay policies for directors at the company's annual
general meeting (ACM) on Wednesday.
Pensions Investment Research
Consultants (Pirc), which represents numerous local authorities, has advised
investors to vote against a new M&S share option scheme. Many executives'
options under current arrangements are thought to he worthless.
In contrast to Pirc's stand, the
National Association of Pension Funds (NAPF) is advising its members to vote in
favour of M&S's new share option scheme.
Pirc's move follows a week where directors' pay made the headlines again after
Vodafone made a one-off bonus payment to executives (see hack page).
After a turbulent 12 months for
M&S, the company is asking shareholders to hack a new, arguably more
generous, share option scheme for executives.
The new scheme allows maximum annual
awards of 200% of salary this year and 150% thereafter.
By contrast, the scheme established in
1997 has a maximum bonus of eight times salary over the life of the scheme.
However, the launch of the new scheme follows a terrible year for M&S
investors. So far this year the company's share price has dropped from
428.5p to 213p and currently languishes at around 230p.
Stuart Bell, research director at Pirc,
said: "Arguably, the new scheme is acting to replace share options which are
now worthless. The new scheme also seems to have higher maximum award limits
and weaker performance conditions."
Bell said that companies should he
setting tough performance targets for directors to encourage higher shareholder
value. Seemingly the new M&S scheme fails to deliver this.
The scheme launch follows the
appointment of a new executive chairman, Luc Vandevelde, at M&S in March.
The company said that the new scheme is
necessary to make meaningful grants to all its key executives this year; in
order to motivate them to achieve a recovery in the fortunes of the business. A
spokesman for the NAPF told PW that the new scheme's performance
criteria were not below those of the company's peers".
Pensions Week
17 July, 2000
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