Top pay plan a 'dead duck'

PLANS by the Greenbury committee on top pay to force key executives to reveal the true value of their pensions have been labelled a "dead duck" by a leading institutional investor.

Directors often award themselves large pay rises just before retirement, a racket that boosts salary-related pensions, which other members of the scheme - lowly employees - have to bear.

The row was sparked by British Gas chief executive Cedric Brown's 75 per cent pay rise, just before his retirement.

But the so-called "transfer value" proposals have been bogged down over technical arguments, such as life expectancy. And changes of heart by committee chairman, Sir Richard Greenbury, head of Marks & Spencer, and key fund managers have sidelined the plans.

"I suspect transfer value [Greenbury's original proposal] is a dead duck," said one prominent institutional investor who originally supported it. "I've changed my mind. It was open but it wasn't necessarily fair."

But in-fighting continued at the weekend between proponents of an alternative "accrued benefits" formula now proposed by Sir Richard, the Confederation of British Industry and the Institute of Directors, and those backing a compromise to be put forward by the National Association of Pension Funds.

The CBI scheme, though, is seen as the leading candidate to be included in the Stock Exchange's next set of company guidelines due by the middle of the year.

The accrued benefits plan would result in lower figures being disclosed and smoothed out over time. Instead of huge capital values, it shows pensions owed over the period of contribution, plus any increases - including those from pay rises - since the last annual accounts.

However, investors com-plained that it still will not show how much it costs to fund the pensions.