UK – The new chief executive of venture capital firm 3i is to get an extra 200,000 pounds (299,600 euros) a year on top of his salary to enable him to beat the government’s controversial 1.5 million-pound lifetime pension cap.
Philip Yea, former group finance director at drinks firm Diageo, took over as CEO at 3i from Brian Larcombe at the company’s annual general meeting today – on a 600,000-pound base salary.
“Mr Yea will join the 3i Group Pension Plan on the standard terms for new employees,” 3i said.
But it added: “In light of Mr Yea's age and the fact that the Inland Revenue pension cap will apply to his membership of the 3i Group Pension Plan, Mr Yea will receive additional payments of 200,000 pounds per annum (subject to tax and employee national insurance contributions) to enable him to make additional pension provision.”
A 3i spokesman said the company took remuneration advice from PricewaterhouseCoopers and from recruitment consultant Spencer Stuart.
Last month consulting firm Watson Wyatt released a survey saying that “few” executives would be compensated for the pensions cap.
It surveyed FTSE-350 companies and found that more than 90% of them “do not expect to compensate executives for the increase in tax they may have to pay as a result of the 1.5 million-pound Lifetime Allowance for pensions savings”.
"Not compensating executives for the increase in tax isn't surprising in the current environment," said John Ball, head of executive reward consulting at Watson Wyatt at the time. Ball declined to comment for this article.
3i also said it would sell its quoted fund management activities as they are “no longer a core part of 3i's strategy”. In the year to the end of March, its quoted fund management business, including its pension fund, generated 3.5 million pounds of fee income. It has 330 million poinds under management. The spokesman said 3i was in talks with "very well established" large international fund management firms.