Chairman's cut

10 January 2003 By Hugo Dixon Follow @hugodixon

Lapthorne’s package may look generous. But it has highly attractive incentive properties which ought to appeal to shareholders. Giving incoming chairmen a significant slice of the upside is an appropriate way to entice recruits into troubled companies.

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Richard Lapthorne, Cable & Wireless' incoming chairman, has negotiated a highlyincentivised package that effectively amounts to be being paid almost entirely in stock.

Lapthorne will be paid a salary of about £350,000 in each year of his threeyear fixedterm contract, according to a person familiar with the situation. But he will effectively recycle virtually all the cash into C&W shares.

Lapthorne is buying 1m C&W shares now at Friday's price. He is also committed to buy 200,000 shares at the end of each of the three years. He will pay the current share price for the first tranche. He will pay about 65p a share for the second tranche and about 80p a share for the final tranche, according to a person familiar with the situation. Lapthorne will, however, be able to buy the shares on the market if the price is lower than these levels.

At the end of the threeyear period, Lapthorne will receive another 1m shares for free – provided he is still chairman. He is committed to hold all the shares for as long as he is chairman.

Lapthorne's predecessor, Sir Ralph Robins, was paid £253,537 in cash in 2001, the last figure published by the company.

To read our linked article on Lapthorne's challenges at C&W, <a href="ve.asp?lid=1&sid=5547">click here</a>

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