Jarvis attacked over bonuses

THE Association of British Insurers has slapped a 'red-top' corporate governance warning on Jarvis in a move that is almost certain to spark a shareholder revolt at the company's annual general meeting next month.

The insurance body is furious that former chairman Paris Moayedi and two other directors ousted since the start of the year, walked away with bonuses for their performance during the year of the Potters Bar crash.

Moayedi got a £260,000 bonus to go with the £600,000 he bagged for loss of office. Anthony Cunningham received a £110,000 bonus while Andrew Sutton netted £100,000. Both also received six-figure compensation payouts.

The bonus payments were originally deferred for 12 months after the crash, which claimed the lives of seven people, but were paid out this year despite the company's dismal performance.

Jarvis is now worth just £48m after a string of profit warnings and breach of banking covenants. Its share price has dived 93% in the past year.

Peter Montagnon, the ABI's head of investment affairs, said shareholders were also outraged the bonuses could have been paid when the company admitted this month that its internal controls were not working.

He said: 'The company will argue the bonuses were an entitlement, that they were not able to do anything else, and they did defer payment at the time of the Potters Bar crash. But the shareholders are asking why the company is in this position in the first place, of feeling they have to pay given the way Jarvis has performed, the share price and the terrible disaster.'

Montagnon added: 'We have to make some kind of mark here. You have to set conditions for bonus and termination payments which actually are going to pay on the basis of performance, not on the basis of no performance.'

The ABI's members hold 20% of all shares traded on the London Stock Exchange and rarely issue a red-top warning, the most severe of its traffic light system of red, amber and green that flag issues for investors.

While the body refuses to tell shareholders how to vote, the red-top guarantees Jarvis chairman Steve Norris will struggle to get the firm's remuneration policy approved at its delayed AGM on 14 October.

The ABI has already told Jarvis about its concerns and Montagnon conceded that the group's audit committee has committed to reviewing internal procedures.

In its annual report two weeks ago, Jarvis stunned shareholders by admitting the 'increasingly complex nature of transactions' made by the business had put considerable strains on controls and meant there were shortcomings in the amount of information passed to the board.

Montagnon said: 'It's very important the review does move forward. We have to move forward, but we can't condone the past.'

A Jarvis spokesman: 'The company believes it was obliged to pay the bonuses and that it had no choice in the matter.'