Institutions rule Wembley pay deal offside

Wembley has become the latest company to incur the wrath of the corporate governance lobby, over charges that its contracts for top executives include "reward for failure" clauses which would see them receive pay-offs worth two years' salary if the struggling gaming group was taken over.

The group will face a showdown with the National Association of Pension Funds over the issue at its annual general meeting on 24 April. An NAPF spokesperson said: "This is potentially an award for failure and we do not think it is in shareholders' interests."

Wembley, whose shares have slumped after it announced earlier this month that it faces serious bribery allegations in the US, is pressing ahead with its controversial contracts for Nigel Potter, its chief executive, and Mark Elliott, its finance director.

Under the terms of the contracts, Mr Potter and Mr Elliott would see their one-year rolling contracts transformed into two-year notice periods if the company changed hands and they were forced to step down. Mr Potter earned £392,000 in salary and bonus in 2002 and Mr Elliott received £276,000.

The list of companies on the hitlist of shareholder groups is lengthening. The NAPF and the Association of British Insurers, which also represents institutional shareholders, have already criticised the plans by Schroders, Reuters and Amvescap to award senior management.

The shareholder groups can claim one scalp – the struggling music giant EMI yesterday confirmed it was scrapping controversial severance terms for two of its top executives. EMI, home to artists such as the Rolling Stones and Norah Jones, said its chairman, Eric Nicoli, and finance director, Roger Faxon, would receive one year's severance pay instead of two in the event of losing their jobs in a change of ownership.

An NAPF spokesperson responded to EMI's change of heart, saying: "On the face of it, this is encouraging. If the final package comes up with a revised version which puts people on one-year rolling contracts, I'm sure we'd be happy to give it our support."

However, EMI said it was not changing the two-year severance pay terms in the event of a change of control for either Alain Levy, who was brought in to revamp its recorded music arm, or the head of its publishing division, Marty Bandier.