Amvescap shareholders told to vote against company largesse to managers

Amvescap shareholders told to vote against company largesse to managers

	Published : Sun, 23 Apr 2006 14:05 By : Andrew Stead Print this Story

LONDON: Fund manager Amvescap is facing a shareholder revolt over a bonus payout being proposed to its outgoing chairman Charles Brady and the proposed compensation terms for its new chief executive Martin Flanagan.

Corporate governance body Rrev has advised its members who are the firm's shareholders to thwart the efforts of the board to get the two packages worth around 12 million pounds passed at the company's annual general meeting Thursday next.

Flanagan has received a 6.6-million- pound-compensation package and Brady 5 million pounds as departing cash bonus.

Rrev also urged the shareholders to vote against the four-year contract that is being given to Flanagan.

Joining Rrev, which provides advice to such organisations as the National Association of Pension Funds, are the Pension Investment Research Consultants (Pirc) and Manifest, the U.K. proxy voting agency.

Rrev described the 5-million-pound cash bonus, which has already been paid to Brady, as "inadequately justified". The Anglo-American firm had said in its annual report that the payment is being made to Brady for leading it through a "difficult period", warding off a hostile bid and identifying a successor.

Flanagan is given a compensation of 6.6 million in cash and 5 million shares in lieu of incentives he lost when he left Franklin Templeton. He is also given a four-year initial contract, which is turned into a one-year rolling contract after the initial period.

Rrev's head and former head of corporate governance at JP Morgan David Patterson said it is not clear why a four-year contract was being agreed to. There is risk that it may not work and shareholders will be forced to bear the costs. An initial two-year contract should have been sufficient with one-year rolling. He also suggested the incentives should be based on performance which would have persuaded Flanagan to stay with the company.

Atlanta, U.S.-headquartered Amvescap has nearly 52 per cent of its shareholders based in the U.K., 33 per cent in the U.S. and some 6 per cent in Europe. It has a controversial past, especially when it had to pay $450 million to settle charges that it allowed large corporate clients to make trades, which adversely affected small investors.

Pirc too has taken an identical stand. It feels directors like Brady should not be additionally rewarded for fulfilling their job description.

It said under the terms of contract, Flanagan will receive four times his annual $790,000 salary if he loses his job at any point before 2010. He received a one-off $11.75 million "make whole payment" when he was hired last August, Pirc said.

Amvescap has some 216 billion pounds in funds under its management.

The annual report says the firm's total pay to directors more than quadrupled to $31.9 million last year. This included the "make whole" compensation payment, and the bonus paid to Brady.