Unions urge votes against executive pay schemes

GREAT BRITAIN/USA: Two IMF affiliates -- the UK's Iron and Steel Trades Confederation and the Communications Workers of America -- are publicly calling for votes against the executive remuneration policies of two UK companies: the ISTC with regard to the Anglo-Dutch steelmaker Corus, and the CWA for the global information company Reuters. Trade unions are showing increasing interest in shareholder voting on executive pay, and in the UK, where all listed companies must now put pay policies to an advisory shareholder vote, executive pay has become a major focus for investor discontent at annual general meetings. Reacting to proposals revealed in the just-published annual report of Corus, to change the bonus scheme for directors so that it is no longer linked to profitability and the maximum payable would be increased from 50% to 60% of salary, Michael Leahy, ISTC general secretary, said that directors wanted to be insulated from failure. "At a time when Corus has lost its chief executive, has recorded another loss, warned of capacity and plant reductions and staff morale is at an all time low, what type of example is this to set?" asked Leahy. He is urging shareholders to reject these proposals at the annual general meeting scheduled for April 29. Prior to that, on April 14, the ISTC is organising a "Red Card Day" to protest against Corus management and demand the resignation of Corus chairman, Sir Brian Moffat. In a message of solidarity to the union, IMF general secretary Marcello Malentacchi said the IMF fully supported the call for Sir Moffat to resign: "His resignation -- together with an urgently needed management change to ensure that proper consultation and constructive partnership are the order of the day -- would be in the fullest interest of Corus workers, their families and communities." In a letter to Reuters shareholders, who will meet on April 17, Morton Bahr, CWA president, has also called for opposition to approval of the directors' remuneration report. Executive pay, says Bahr, is "not simply a cost issue, but also an issue of corporate performance." But performance targets, he stated, had to be well balanced -- not rewarding under performance, and not providing incentives to executives to take undue risks or make short-term decisions. There was particular concern about the potential for excessive executive pay in light of major recent layoffs, corporate restructuring and the related impacts on working conditions. Note: On April 23, Corus announced the appointment of Philippe Varin as chief executive and Jim Leng as chairman, respectively, of the Anglo-Dutch steelmaker. Commenting on this news, the ISTC general secretary, Michael Leahy, said that the "unique red card protest staged by Corus' employees last week has clearly been listened to and Moffat has, in effect, gone."