Jon Terry, head of remuneration at PricewaterhouseCoopers, said: "A number of these restrictive stock-type arrangements will come forward this AGM season."Err... I think we can take it then that PwC has advised some of its clients on such schemes. If that is the case, maybe investors ought to question PwC about where the initiative came from. Is it remuneration committees, or are rem consultants being proactive?
Second the attitude of the ABI:
"We can't support schemes which end up costing the company more than would otherwise have been the case or simply shift the tax burden from the individual to the company. Shareholders recognise that schemes should be efficient in relation to tax implications, but there is a limit. Shareholders cannot support schemes which are nakedly for the purpose of avoiding tax," he said.Exactly. What is the gain for investors in all this? Unless we are expecting a mass exodus of executive because of the 50% rate, why should investors feel any need to give their assent to such schemes? And the danger is that if they don't challenge those that are put forward, then the practice will spread, again with no benefit for investors.
Therefore if investors don't think that companies should help executives avoid the tax increase why not simply introduce a policy that they will vote against resolutions seeking authority to introduce such schemes. I'm assuming that as they relate to actual schemes (or amendments to them) they will need a separate resolution. So they could be voted down, rather than simply being targeted via the vote on the rem report.
In addition, if investors find out that it is the rem consultants being proactive (which wouldn't surprise me) why not encourage companies to appoint an alternative firm for future business?
2010 is going to be when we discover if shareholders are really going to change their approach on remuneration, and this issue would seem to be a good litmus test.