Icap profit-sharing plan attacked

A PROFIT-SHARE scheme for senior directors at the City's biggest money broking group, Icap, has come under attack from the National Association of Pension Funds.

The NAPF said the fund, which could give chief executive Michael Spencer and his three fellow executive directors a pot of at least £4.2m between them this year if profits exceed £140m, was too generous.

Under the Icap scheme half the bonus pool is paid out in shares immediately with a matching award of shares after three years if the director is still working for the company.

The NAPF objects to the fact that the deferred shares are paid out regardless of the performance of the company over the intervening three years. It is urging members, who include some of the City's most powerful institutions, to vote against the arrangements at the company's annual meeting next week. It is the latest in a series of blasts the NAPF has directed at boardroom pay this year.

In its report to members, the NAPF said it could not support the proposals because 'best practice for plans of this nature is for the award of any matching shares to be subject to the achievement of additional performance conditions'.

A spokesman for the company, which has already paid £5.75m into the bonus-share pool for directors, said he was bemused by the stance taken by the NAPF.

The deferred shares could only be paid out if the company had already performed well, he said. 'All the targets have to be achieved if these chaps are going to get their bonuses.' He pointed out that the new 'nice and simple' bonus system had replaced an option-based scheme to try to clarify the way directors are rewarded.

He said: 'The shares are bought in the market and held in the executive's name in the pool. At the end of three years, if he remains with the company he gets the matching shares he has been awarded. In the meantime these chaps are going to be thinking right in line with shareholders.'

In the current financial year Spencer, who founded Icap 17 years ago, will receive a basic salary of £360,000, and a bonus of £3.6m if the profit targets are hit. Of this £1.65m will be paid in cash and £1.65m in shares.

Chief operating office David Gebler stands to get £225,000 base and a bonus of £950,000, and executive director Stephen McDermott receives a $450,000 salary and a bonus of £750,000. Finance director Jim Pettigrew receives £175,000 and a bonus of £750,000.