John Lovering, the new chairman of Mitchells Butlers brought in by the rebel shareholder Joe Lewis, today said that he was changing executive bonuses because his senior managers valued their pensions more than their share options.
Mr Lovering said: "Our reward system has favoured continuity and security, not profit maximisation. This is not a criticism, merely an observation, but we have made our senior managers value their pensions more highly than their share options rational response to plc life with a big generous defined-benefits pension fund."
Mr Lovering, the former chairman of Debenhams, had promised a complete strategic review when he was brought to the helm two months ago after Mr Lewis, the billionaire trader and 23 per cent shareholder, succeeded in voting off his predecessor Simon Laffin.
MB"s new chairman said that he was determined to address a pension funding problem and added: "The senior management compensation schemes have been such that pension entitlements have been more significant than the rewards available from creating shareholder value." The remuneration committee is drawing up a new bonus plan to better align management with shareholders.
Related LinksBusiness Big Shot: John LoveringMitchells Butlers finance chief quitsMitchells Butlers investors seek new boardMr Lovering also wants to accelerate the group"s current plan to shift from pubs that rely on drinks sales to those that rely on dining, such as Toby Carvery and Harvester.
He said that he wanted to "plan a withdrawal from the more price sensitive drinks-led brands and outlets", likely to include All Bar One.
"We have previously identified a number of businesses which are not central to our future strategy, but we have only progressed slowly in exiting them ... Our portfolio has too many brands," he said.
He was prepared to license some brands to other operators, to convert some outlets to food brands and to sell or swap others with other pub businesses.
Mr Lovering wants to more than double the number of Harvester, Toby Carvery, Crown Carveries and Sizzling Pub Co outlets by opening in leased buildings in leisure centres and out-of-town shopping centres with plenty of car parking.
There had been speculation that Mr Lovering might oust MB"s current chief executive, Adam Fowle, but the chairman praised Mr Fowle, calling him "immensely experienced", and said that the business required a "fully engaged chairman" to oversee the "business reshaping" while Mr Fowle got on with managing the business.
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