News Column

Bosses forced to wait longer for bonuses

July 4, 2014

By Ruth Sunderland, Daily Mail, London

July 04--Nearly half of Britain's top 100 companies are making executives wait up to two years longer to cash in bonus schemes after an intervention by Fidelity, one of the world's biggest fund managers.

Fidelity has targeted Long Term Incentive Plans (LTIPs) which, despite their name, frequently dish out multi-million-pound rewards after as little as three years.

Investment supremo Dominic Rossi wrote to more than 400 companies in the UK and Europe warning them a three-year LTIP was too short and that Fidelity would this year vote against any scheme that lets executives cash share options within that time.

From 2015 it will not back any scheme of less than five years.

The fund manager, which ranks among the most powerful shareholders in the City, has voted against at least one pay proposal at 52pc of annual meetings held so far this year by FTSE 350 companies.

Rossi said previous attempts at a softer approach did not have an impact, but that there was evidence Fidelity's tough new stance is working.

Some 47 FTSE 100 firms are now forcing their executives to hold LTIP options for between three and five years, with 27 of those insisting on a full five-year term - up from 17 companies with schemes longer than three years at the start of 2013.

'The standard three-year model is broken and is now in retreat,' Rossi said. 'The great financial crisis will lead to many changes. We are in a different era.'

His campaign for longer-term incentives had not attracted a 'groundswell of support' from other big City investors, and he suggested this was because some of the large asset managers 'have their own LTIPs'.

Senior staff at Fidelity can buy shares with their annual bonus which they can cash only when they leave the firm or retire.


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Source: Daily Mail (London, England)

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