C&W runs into a storm over £220m bonus plan

May 15 2006 by Nic Paton Print This Article

Struggling telecommunications giant Cable & Wireless, which just weeks ago announced it was cutting 3,000 jobs in Britain, has unveiled a £220m bonus scheme for senior managers.

The figure, which has been condemned as "outrageous" by unions, is set to mimic the £220m profits predicted for the company in its full-year results.

The bonus scheme has been detailed in a letter to shareholders by chairman Richard Lapthorne, and the comes three months after C&W split its business in two.

If accepted, the new pay structure would see the fortunes of about 60 senior executives aligned much more closely with the company's share price.

The four-year package will offer the two divisional heads the chance to earn £22m each if certain targets are reached, with the remaining £176m distributed among 30 of the most senior managers in both divisions if the shares hit 220p.

The Communication Workers Union has called the bonus "excessive" in the wake of the job losses and demanded talks with management.

In his letter, Mr Lapthorne said the new incentive package was critical if the company was to boost the value of its business units.

"It will provide a clearer link between the performance and reward for the executive, while retaining alignment between the interests of executives and shareholders," he said.

C&W issued its second profit warning in four months in February and has shed 2,000 staff since the end of 2004.

Earlier this year chief executive John Pluthero hit the headlines after sending staff an email warning them of job losses and telling them they all needed to work harder.

Anyone not up to the challenge, he warned, should "step off the bus".