Bad publicity ahead of tomorrow's AGM, at which institutional investors are still expected to kick up a stink over the way directors reportedly wangled themselves huge bonuses by amending the presentation of accounts. Chart signals remain negative despite today's little uptick.


FREEPORT IN STORM OVER RULES CHANGE
James Rossiter, Evening Standard
11 November 2003

WHILE recent corporate governance attention has focused on the Murdoch family coronation at BSkyB, a lower-profile but nasty little row has engulfed property minnow Freeport.

The controversy centres on four Freeport directors, headed by executive chairman Sean Collidge, who shared 376,000 in bonuses this year, with Collidge taking more than half of the total after a controversial accounting change enabled the company to post higher profits.

The payout and a scheme that awards directors lump sums worth 35% of their basic pay in the event of a change of control, have angered institutional shareholders.

Freeport has attempted to head off a revolt by promising to bring in external consultants to advise on executive remuneration but a similar move by drugs group GlaxoSmithKline earlier this year failed to prevent shareholders rejecting chief executive Jean-Pierre Garnier's 22m severance and pay package.

Freeport's last-minute manoeuvrings have failed to placate investors ahead of Thursday's annual general meeting, where matters will come to a head. The National Association of Pension Funds is advising its members to abstain from voting to endorse its pay policy.

'While we welcome this sign that they are taking on board shareholders' concerns, we have to see the detail before we can comment on whether there is any significant improvement. We are not changing our voting recommendation at this time,' said a spokesman.

Under the change in accounting policy, sales are now recognised from when contracts are exchanged, rather than from the date of completion.

The company used the change to book a 3.8m profit on the sale of its Braintree Leisure development in Essex in the 2003 year-end results, triggering the board's bonuses. Without that gain, profits would have fallen.

Shareholders began voicing their opposition after a report from online research firm Company Reporting highlighted the bonuses. Collidge dismissed the report as 'totally misguided'.

Collidge, who has enlisted the support of supermodels including Claudia Schiffer to promote shopping centre openings, added: 'We were forced to do this under accounting rules. It has nothing to do with bonus. The bonus is based on [ Braintree's] first annual valuation.'


(Similar articles in Telegraph and elsewhere)