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PCCW, the city's largest telecommunications firm,
will link its executive directors' discretionary bonus
payments to the company's share price as an incentive
to end six years of underperformance compared with
the benchmark Hang Seng Index.
Executive directors and senior managers, including
managing director Alex Arena, Mico Chung Cho-yee and
Robert Lee Chi-hong, will be subject to the new scheme
announced by chairman Richard Li Tzar-kai at the company's
annual general meeting yesterday.
"We want our management, our staff and our shareholders
to know where we are, what the target is," said
Mr Li when responding to a shareholder's question
on staff expenses.
The bonus payments this year would be in two parts:
one related to operational benchmarks and the other
linked to how the company's shares performed relative
to the stock market, Mr Li said.
"If the share price of PCCW underperforms with
comparison to the Hang Seng Index, the directors will
get only 50 per cent of the bonus they initially expect
to receive," he said.
Mr Li hoped the company's growth potential in its
loss-making Now TV and broadband businesses would
be reflected in the share price.
PCCW shares have gained 4.02 per cent this year by
yesterday's close of HK$4.92, outperforming the 3.35
per cent rise in the Hang Seng Index.
Even so, PCCW is still the worst performer among
all Hang Seng Index constituents since February 2001,
with the shares down 80 per cent in the period, according
to Bloomberg data.
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"The new bonus scheme will be a performance
indicator," Mr Li said. "The executive directors
will get only 50 per cent of the bonuses they will
be entitled to if they meet all internal business
targets but fail to help our shares outperform the
market."
The company hoped the scheme would also help to increase
PCCW's transparency to the public, a source said.
"We have discussed introducing such a performance-based
bonus for several years. The link with the Hang Seng
Index will be the simplest mechanism," the source
said.
"There is no guarantee of success [for the scheme]
but there is a guarantee that all the management will
try their hardest to perform."
Mr Li yesterday also revealed that his privately
owned Pacific Century Group had been approached to
join a consortium bidding for Canadian-based telecommunications
firm Bell Canada Enterprises.
The purchase price for Bell Canada would be about
US$50 billion.
Mr Li, who has Canadian citizenship, was asked to
take a small stake in the consortium led by United
States private equity firm Cerberus Capital Management,
according to a source, who added that no decision
had been made.
"Pacific Century Group has offered this opportunity
to PCCW and PCCW has confirmed it is not interested
in participating in this investment," Mr Li said.
Pacific Century in a statement last night said its
discussions with the consortium were still at an early
stage.
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