Biotech investors urged to veto executive pay deals

Investors in British Biotech are being advised to vote against the pay packages of its directors – including its chairman, Peter Fellner, who also heads the UK's biggest biotechnology firm, Celltech.

British Biotech is merging with Cambridge-based RiboTargets, to form a group valued at around £52m. But directors have taken the opportunity to improve their share option packages, and Dr Fellner could claim up to 4 per cent of the company's shares if it does well, which could give him a windfall of £8m.

The scheme will give other directors up to 10 per cent of the company's shares, on top of options issued before the merger. British Biotech's shares are at just over 3p, compared to around 12p a year ago.

Investors will vote on the deal on 22 April. The huge corporate governance and proxy voting firm Institutional Shareholder Services has advised its 25 UK clients to vote against the resolution. Manifest, a UK-based corporate governance specialist, has also highlighted the issue in its own research.

A British Biotech spokesman said its largest shareholder, Amvescap, was supportive of its remuneration plan.

Separately, the National Association of Pension Funds has recommended its members abstain in a vote on the remuneration package of technology company ARM Holdings. The shareholder group is concerned that performance targets have been reduced "considerably" without an explanation.

An ARM spokesman said that due to tough economic conditions, meeting its new targets would still be a challenge.