Backing for ITV chief's multi-million pay deal

The prospect of a fresh revolt over “fat cat” pay receded today after a major investor group pledged to support a deal for ITV boss Charles Allen worth £24m (€36.3m) over four years.

The British National Association of Pension Funds (NAPF) offered its backing in spite of an “unusual” method of measuring rewards for directors of the newly-merged broadcaster.

Shareholders of ITV will meet in London on April 19 for its first annual general meeting since the merger of Granada and Carlton Communications earlier this year.

The meeting takes place against a backdrop of investor anger over pay deals that included a £15m (€22.7m) “golden farewell” for ousted chairman Michael Green.

The pay-off was opposed in January by the Pensions Investment Research Consultants (PIRC) in the UK, which is understood to be urging its members to vote against a pay package for chief executive Charles Allen.

Mr Allen will receive an annual wage of £1m (€1.5m), but is eligible for additional multi-million payouts under three reward schemes.

A “Commitment Scheme” allows him to invest three times his annual salary and receive £9m (€13.6m) in shares if ITV outperforms all its rivals over four years.

Mr Allen is also in line for bonuses worth £6m (€9.1m) and free shares worth up to £6m (€6m) under a performance share plan.

As a new company, ITV has not published an annual report for 2003 and consequently there will not be a resolution to approve the company accounts at the annual meeting.

But it is understood that investors will be able to vote on the share performance plan, which replaces an existing executive share option plan.

NAPF said it was not opposed to the pay arrangements after talks with ITV and its advisors, but pledged to monitor the level of awards.

“The company has confirmed that a scaling back of an award would occur if real earnings growth had not occurred over a performance period,” it said.

The pension lobby was also satisfied with changes to the policy to ensure that awards would reflect performance if ITV is taken over.

But it said the method of comparing the performance of ITV with firms in sectors other than the media, including transport, retail and leisure and hotels, was unusual.

Negative publicity surrounding the controversial pay-offs to Carlton directors who had not made the board of ITV also continued “to overshadow the new company”, NAPF said.

NAPF said it had discussed the pay-offs for former Carlton directors with Sir Brian Pitman, who chaired Carlton’s remuneration committee.

“But after considering the arguments, we have decided that recommending a vote against former Carlton directors on the ITV board would not be appropriate,” it said.