Anglo set to alter share scheme amid criticism
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MINING giant Anglo American has admitted that its share-option schemes offered to executives are not in line with UK best-practice guidelines, but says it will be reviewing these schemes.
Two UK-based investor bodies have raised concern about Anglo's share options allowing for "rolling performance targets", saying it that make it too easy for directors to meet targets and make millions for themselves.
The Association of British Insurers has said that "shareholders may be concerned with the structure of the share options scheme", and the UK's National Association of Pension Funds has, according to Britain's Observer newspaper, also spoken out against the firm's share options structure.
According to the Observer the "rolling performance targets" structure allows directors up to 10 years to make good on performance deadlines that must normally be met after three years.
Secretary of Anglo's remuneration committee Chris Corrin played down the concerns as "not much of an issue for institutions in light of the fact that we have undertaken to review our share options schemes".
But he admitted yesterday that "in respect of our share options schemes, we are aware we don't conform to best practice at this point". The share options schemes were set up in 1999 when Anglo listed in the UK and share options schemes allowing for "rolling performance targets" were normal practice.
Corrin said that Anglo had never used the rolling-targets provision as it had to date always met its targets for earnings a share. However, he said that the overall climate had moved against this type of share-option scheme, so Anglo had undertaken to review its long-term incentive schemes.
The company had written to its major shareholders informing them of the impending review, but gave no undertaking as to the form of restructuring that would take place in its incentive schemes.
"We will look at our share incentives schemes in view of what we need as a group and in light of accounting, legislative and corporate governance changes," Corrin said.
He said that the need to retain quality personnel would naturally play a role in changes to be instituted.
From January 1, companies are required to put their remuneration reports to advisory shareholder votes at their annual general meetings.
Anglo's annual meeting will take place on Friday in London. Corrin said major shareholders were advised of the coming review of the incentive schemes, and they appeared to be supportive.
Apr 22 2003 06:51:00:000AM Rob Rose Business Day 1st Edition
Tuesday
22 April 2003
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