Bosses confront fat-cat rebels

AN unprecedented showdown between bosses at some of Britain's biggest companies and their leading shareholders will be held tomorrow in an attempt to defuse a potentially explosive row over fat cat pay and boardroom appointments.

Senior business chiefs, led by CBI director-general Digby Jones, are expected to express anger at the growing and public activism of some institutional investors.

Bosses were particularly alarmed by the recent ousting of Michael Green from media group Carlton and the rebellion against the appointment of Sir Ian Prosser as chairman-elect of supermarket chain Sainsbury.

Jones said: 'This is a chance for investors and companies to discuss informally issues of common concern and to better understand any areas of difference. Megaphone diplomacy is bad for business all round.'

The London meeting comes as the latest crop of accounts show little sign of the 'restraint' on boardroom pay urged by Trade Secretary Patricia Hewitt.

It emerged last week that the total pay package for Barclays chief executive Matt Barrett shot up to £5 million, while profits at the bank rose by a fifth.

At forthcoming annual meetings, bosses are keen to head off shareholder revolts such as last year's humiliation of GlaxoSmithKline chief executive Jean-Pierre Garnier.

They are also becoming increasingly annoyed at what they see as moves by investors to dictate who sits on the board.

Jones added: 'Greater shareholder activism is a good thing, but there is broad agreement that public disagreement should be the exception rather than the rule. Running down UK plc is in nobody's interest.'

Bosses at the meeting will include Boots chairman Sir Nigel Rudd, who heads the remuneration committee at Barclays. Major shareholder groups represented will include Hermes, Legal & General and Insight.

Generous nature of the serial chairman

SIR Nigel Rudd is no stranger to controversy about boardroom pay. The 57-year-old serial chairman - he sits atop no fewer than four big quoted companies - seems to be at odds with fads in corporate governance.

Only last week, two of the companies that he chairs were embroiled in controversy about executive pay.

At Barclays, Rudd chairs the bank's remuneration committee, which approved a huge pay rise for chief executive Matt Barrett, who last year took home £5m, including salary and bonuses of £3.1m - up 82% on the previous year.

Barclays also plans to install Barrett as chairman next year, contrary to best practice rules.

At car dealer Pendragon, where Rudd is non-executive chairman, shareholders recently raised concerns about the lack of independence of the remuneration committee, the unusual practice of making directors' bonuses pensionable, the lack of detail about pay schemes, and chief executive Trevor Finn's two-year contract.

As chairman of Boots' pay committee, Rudd approved a £757,000 pay-off to former chief executive Steve Russell, who quit after profits plunged. Boots' shares plunged 13% on Friday after a profits warning.

Rudd also chairs glassmaker Pilkington where Warren Knowlton, head of the automotive division, received a £1.8m pay-off under the terms of his two-year contract.