Peterborough’s Thomas Cook gives shareholders a headache over top pay

Thomas Cook.
Thomas Cook.
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Peterborough holiday giant Thomas Cook could run into trouble from shareholders over the company’s pay plans for its chief executive.

The world’s oldest tour operator wants to incentivise chief executive Peter Fankhauser with new arrangements to pay him performance-related bonuses on top of his £703,000 salary.

Peter Fankhauser, chief executive of Thomas Cook.  ENGEMN00120121130150524

Peter Fankhauser, chief executive of Thomas Cook. ENGEMN00120121130150524

Investors groups are known to have written to shareholders about concerns over a long-term incentive plan for the coming year.

The share-based bonus will pay out a maximum of 165 per cent of Mr Fankhauser’s salary instead of 150 per cent agreed last year.

In addition, there is disquiet about the proposed introduction of a new share scheme called the Strategic Share Incentive Plan or SSIP.

This is an alternative to the long term incentive plan and gives the board flexibility to incentivise directors against new strategic aims it sets for the business.

It would be regrettable if senior directors set their face against the Prime Minister’s policy of a country that works for everyone.

Peterborough MP Stewart Jackson

But, Peterborough MP Stewart Jackson has warned: “Thomas Cook’s brand is a very valuable asset and it would be regrettable if senior directors set their face against the Prime Minister’s policy of a country that works for everyone and there was any appearance of untrammelled corporate greed.

“I’m sure the company understands that risk.”

But, Thomas Cook directors say the tourism sector is fast moving and it may be necessary to develop new goals as the year goes on.

The bonus plans will come under the spotlight at the company’s annual meeting today (January 9).

A spokesman for Thomas Cook, which employs 1,115 people at its offices in Westpoint, in Lynch Wood, said: “Our Remuneration Committee actively engages with shareholders and advisory groups on remuneration and any proposed changes throughout the year, ensuring that it takes their comments and feedback on board.”

At last year’s annual meeting, 25 per cent of shareholders voted against the company’s remuneration report, after terror attacks in some destinations had toppled the firm’s profits.

But, it is known directors feel Mr Fankhauser has significantly transformed Thomas Cook over the year. Improvements include putting the customers at the heart of the business, securing improvements in services and costs, and embedding a culture of being a customer-driven business.

Last year was a tough one for Thomas Cook, but by the end of the year the company was able to restore its dividend payments - the first in five years - and made confident predictions about future bookings and an annual profit for the second year running.