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Proxy Agency Sums Highlight Excessive Bonuses

Neil Baker | December 20, 2010

A proxy voting agency says it has worked out an objective way of calculating whether companies have paid “excessive” bonuses to their directors.

The agency, Manifest, says the technique will help investors to decide whether to vote in favor of the bonus element of a company's pay plans.

Manifest developed the technique with Swiss research organization Obermatt, which already has a quantitative methodology for recommending to companies the level of bonus payouts they should make, based on the extent to which the company has outperformed its peers.

The proxy agency took Obermatt's recommended payout level and compared it to the actual bonus payouts recorded in the annual reports of FTSE 100 companies.

It says it identified several companies that had potentially paid “excessive” bonuses, including Tesco, Reckitt Benckiser, Randgold Resources, and Rio Tinto....

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