Corporate governance watchdog Pirc has recommended that shareholders vote down a proposed revamped long-term incentive scheme at troubled media company SMG, in which its new chief executive could pocket free shares worth £2.5m.
The new LTIP plan, which is to be put to an extraordinary meeting of shareholders tomorrow, will seek approval for a potential total of £6.8m worth of share awards to a select group SMG executives this year.
Under the new plan, chief executive Rob Woodward will get a 2007 LTIP shares award worth a total of £2,493,749 in 2010 when the awards vest, if SMG's share price hits 140p, dwarfing his salary of £380,000.
The Pirc alert states: "Pirc does not support share price as a performance target as it is subject to factors outside the directors' control due to the lack of relative comparator.
"In addition, the maximum award for the chief executive will be increased to 300% of salary for one year."
It added: "While we accept that the changes to the performance conditions are for one year only, our concerns over the use of share price are such that we recommend that shareholders oppose the resolution."
SMG last year appeared perilously close to financial meltdown and potential break-up after the shock news that it was in discussions with its banks to avoid breaching its covenants.
Its shares crumbled by almost 20% at the time to a 15-year-low of 55.5p.
Yesterday, SMG shares yesterday inched up 0.5p to 62.5p.
Finance director George Watt, the sole survivor of the previous SMG board, also stands to become a major recipient.
He could pocket more then £900,000 under the new LTIP plan. Watt's current salary is £214,000.
In SMG's defence, Pirc states: "In correspondence, the company accepts that share price-based performance targets may not always be appropriate, but points out that the targets have been set relatively high."
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