Funds see red over options

The forum, which is being advised by PIRC, a corporate governance specialist, led last week's attack on Carlton's proposed options scheme for its senior executives, because the targets were too low. Stuart Bell, research director at PIRC, said that 'dozens of companies' were likely to be targeted in 2001

Under the Carlton scheme, directors could receive payments equivalent to double their salary if the firm's share price performed in line with the median of the rest of the FTSE.

Greg Vincent, vice-chairman of LAPFF, said: 'It is unacceptable that directors can receive substantial rewards for what can only be viewed as average performance.'

The warning comes as the Association of British Insurers (ABI) has drawn up a revised set of guidelines, calling for executive share-incentive schemes to show a clear link to performance.

Mary Francis, director general, said of the ABI, said: 'We believe that top rate remuneration should be paid only to top rate performers, while those at the bottom of the league should get no extra benefits. As reward levels increase, so must the performance conditions attached to them. Stretching performance conditions is good for the company, good for shareholder value and good for our policyholders.'

The ABI - which represents institutional funds totalling 1.1 trillion - is responsible for monitoring pay schemes on behalf of its members. The revised guidelines stress ABI's emphasis on performance-linked pay and the need for greater disclosure and transparency within executive share schemes.

The guidelines also note the trend toward phased annual grants of options or shares and toward a sliding scale for remuneration, depending on performance.

For a very limited number of UK-listed companies, the ABI has adapted its guidelines to make them more compatible with US practice.