Battle over WH Smith chief's pay
THE staggering £2.6m golden hello for the new boss of beleaguered WH Smith could be voted down in what is expected to be a stormy annual meeting next week.
City investors are being told by the National Association of Pension Funds to vote against the pay package for Kate Swann, the 38-year-old brought in to shake up the retailer.
Poached from Argos and with senior roles at Homebase and Sainsbury's behind her, Swann has won an extraordinary deal as one of the best-paid chief executives outside the FTSE 100.
On top of her £475,000 base pay, she will receive a guaranteed £220,000 bonus this year, though if things go well she could get a further £255,000.
In addition, she is being given share options worth £1.42m and a £500,000 cash payment in 'compensation for the loss of benefits' at Argos. Another £500,000 in such compensation will be paid to her in succeeding years if she stays around. She also has a lucrative pension deal.
However, it is not Smith's generosity the NAPF is criticising but its failure to link her pay to results.
In a statement, the NAPF said: 'The main concern is that the package put together for Kate Swann is insufficiently tied to performance criteria.'
A pay revolt over Swann is just one of a number of rows likely to flare up at next Thursday's meeting.
Other issues include the expected £330,000 'rewards-for-failure' pay-off for Beverley Hodson, 52, the retail director sacked by Swann after a terrible Christmas for WH Smith.
Hodson had already picked up £112,000 for being passed over in favour of Swann for the top job.
Disgruntled shareholders are also expected to bay for the blood of Richard Handover, the former chief executive who stepped up to chairman - specifically against the best practice guidelines of the Higgs Report on corporate governance - and who is seen as author of the companies' woes.
Swann, in the job less than three months, is likely to be criticised for the botched announcement of a profits warning. Smith was quick out of the traps on the first day of the trading year, detailing the extent of its torrid Christmas.
However, that poor trading had already become common currency in the City to the extent that the media was reporting it.
Swann's package was signed off by non-executive director Michael Orr, the wealthy investment banker who used to to run operations at Merrill Lynch, now head of Smith's remuneration committee. His report, however, shows that the committee was also advised by Handover and his predecessor as chairman, Martin Taylor, the former boss of Barclays Bank.
A WH Smith spokesman said: 'Kate is being paid a base salary, with the ability to make a 100% bonus, in line with current market rates. Other payments are designed to attract someone who was losing benefits elsewhere.'
