Stagecoach blows whistle on pay

STAGECOACH has imposed a pay freeze on half of its most senior staff, including chief executive and co-founder Brian Souter, and ordered that all executive bonuses be taken entirely in deferred share options.

In its annual report, published yesterday, the Perth-based transport giant also revealed that, in the year to April, underlying operating profits rose 11 per cent to 227.8 million. Its full-year dividend was increased 11.1 per cent to 6p.

The report also revealed that Souter – who is the firm's largest shareholder – and other senior management received bonuses entirely in shares which cannot be sold until 2012.

Until 2008 the company allowed staff to take up to half of their bonuses in cash – last year the cash element of Souter's bonus was 253,000, just under a quarter of his total pay package.

For the year to 30 April, Souter's total pay package was worth just under 1.1 million, a 3.7 per cent rise over the previous year, although almost half was in deferred share options.

A spokesman for Stagecoach said the all-share bonus policy would remain in place in the current financial year, and that the board had also imposed a freeze on pay, affecting about 50 staff, including directors and senior managers across the group.

And he added: "As a group we're aware of the current challenging environment and in that context the board feels it's important for the executives … to take a lead on pay."

The pay freeze will not affect the vast majority of Stagecoach's approximately 30,000-strong workforce.

The bus and rail operator would continue the process of negotiating "fair, above-inflation" pay rises for front-line staff, the spokesman said.

In the 2008-9 financial year, Stagecoach's two most senior executives – Souter and finance director Martin Griffiths – were paid almost the maximum bonus available.

Both are entitled to a bonus of up to 100 per cent of their basic salary. In the year to 30 April Souter was awarded a bonus of around 95 per cent of his 553,000 salary, while Griffiths was awarded share options worth 374,000, equal to 100 per cent of his salary.

Including pension contributions and benefits in kind, Griffiths's total pay package was worth 853,000, a 3.9 per cent increase over the previous year.

The spokesman stressed that group revenues, dividend and underlying operating profits all rose last year, while the group's performance over five years was among the top 20 companies in the FTSE 250. Stagecoach's non-executive chairman, Robert Speirs, was awarded a 20,000 pay rise to 150,000. Other non-executives, who include co-founder Ann Gloag, Souter's sister, and former Royal Bank of Scotland chairman Sir George Mathewson, were given a 2,000 pay increase to 44,000.

Separately, it was reported yesterday that Souter had decided to give away a 1.6m bonus to charity and the group's pension scheme. This is believed to relate to share options from the group's long-term incentive plan.