Pensions Investment Research Consultants (Pirc) is calling on Anite (AIE) shareholders to oppose the company’s remuneration report at today’s (26 Sep) annual general meeting (AGM).

The body, which represents the interests of institutional investors, sets out a number of specific concerns over the software provider’s compensation policy. These are interesting for what they can tell us about Anite, a weak market this year, and also with regard to how they can be applied to other UK-listed companies. Among Pirc’s major gripes are:

• The performance measures of the long-term incentive plans and the annual bonus are considered inappropriate as they exclude the effects of goodwill, amortisation of intangibles, share-based payments and exceptional items. Pirc argues this shows a lack of alignment of executives’ interests with those of shareholders, as the former are essentially shielded from costs incurred by the company which the latter still have to bear.

• Total potential rewards under all the incentive schemes are more than 200% of base salary, which Pirc considers excessive.

• The two long-term incentive schemes in operation use the same performance measures, conditions and time span so executives could be rewarded twice for the same achievement.

• A three-year performance period for the long-term incentive schemes is not considered sufficiently challenging.

• The termination provisions in chief executive officer (CEO) Christopher Humphrey’s contract entitle him to any annual bonus he would have received if he had continued in his position up until the expiry of his notice period.

Bonus talk

The chairman and CEO of pubs operator JD Wetherspoon (JDW) Tim Martin has weighed in on the issue of target-linked bonuses. ‘Setting of targets has been a key factor in the demise of the banks and many other businesses since it has encouraged excessive debt,’ Martin says.

‘A considerable percentage of Wetherspoon share awards is not based on targets, other than the requirement of working for the company at the time at which the shares are issued. Naturally, the future value of the shares will depend on the success of the company.’

This section is intended to uphold the interests of private investors. We would be keen to hear from you if there are company-specific or market-wide issues you would like to see raised, debated and addressed. Please e-mail editorial@shares.msm.co.uk with your suggestions.