3i to reverse change to bonuses after shareholder revolt


Private equity company 3i, which owns companies such as fashion chain Hobbs, has pledged to change its pay policies after shareholders staged a rebellion at the annual general meeting.

The company, in which New York-based investment house Sherborne has built up a 5% stake, is to change the length of time over which its long-term bonuses pay out after more than one in three investors failed to support the remuneration report.

Sir Adrian Montague, 3i's chairman, said the company had heeded concerns by institutional shareholders about a change to the vesting of long-term incentive plans made last year, which accelerated the timeframe over which the schemes paid out to top directors – including chief executive Simon Borrows who received £2.5m in salary and bonuses last year.

Directors would have to wait only three and half years rather than five.

Montague said the change would be reversed and the bonus scheme pay out in future as it had done previously, with 50% vesting after three years and then 25% in each of the subsequent two years.

The results of the vote of the annual meeting showed that 21% of investors voted against the remuneration report, a level of dissent which rises to 35% if deliberate abstentions are included.

The rebellion took place despite attempts by the new management team to structure the business and pledge to hand shareholders up to 20% of the proceeds of any sales of the businesses in which it invests.

Borrows, a former investment banker, was promoted from running 3i's investments to replace Michael Queen as chief executive last year.

Shares in the company have risen more than 70% since the start of the year as it has begun to shift its business from pure private equity investments into more investments into infrastructure.

Borrows has already cut 168 jobs and is scaling back on its offices around the world.

In January, 3i disclosed that activist investment house Sherborne – run by the British-born Edward Bramson – had begun to amass a stake which has since reached 5%.

Bramson is best known in the City for staging a boardroom coup at fund management company F&C two years ago and his presence on the 3i shareholder register is likely to have also helped bolster the share price.

Powered by Guardian.co.ukThis article was written by Jill Treanor, for guardian.co.uk on Friday 19th July 2013 00.36 Europe/London

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