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The first major pay revolt since the economic downturn started is expected this week with Bellway's directors likely to be told their bonuses and pay rises are not acceptable.
As shareholders prepare to cast their votes at the housebuilder's annual meeting on Friday, City minister Lord Myners suggested that investors had not been tough enough on pay and governance before the credit crunch.
Another row is brewing at Debenhams, where shareholder activist group Pirc has criticised the department store group for poor standards of corporate governance and the potential for its directors to receive bloated pay awards.
Pirc is recommending that investors oppose the remuneration report at the group's AGM this week on the grounds that senior managers could collect 400% of their salary under bonus and incentive schemes - which Pirc says is "excessive".
Many directors are expected to ask for their pay plans to be reorganised because performance targets were set when the economic climate was buoyant. They will argue they need new incentives, but Myners is urging shareholders not to allow a return to the pay packages they sanctioned previously, which he believes encouraged too much risk taking, especially among banks.
The Bellway row centres on more than £600,000 of bonuses paid to top executives even though the performance criteria were not reached.
Pirc says that Debenhams' base salary levels are high compared with other retailers. The company's chief executive, Rob Templeman, saw his pay increase by 19% to £939,000 last year .
However, a bigger concern is linked to termination provisions in directors' contracts that allow them to collect up to two years' pay and perks if they are forced out. Compensation that is equivalent to one year's remuneration is considered sufficient.
Pirc is also critical of the board because it includes non-executive directors who represent private equity shareholders, namely Philippe Costeletos, of TPG Capital, and Jonathan Feuer, of CVC Capital Partners. The venture capital firms, together with Merrill Lynch Private Equity, acquired Debenhams in a deal in 2003. Pirc says that neither of the directors can be considered independent.
Debenhams surprised the City last week after it revealed that like-for-like sales had not fallen as steeply as expected. Although the company managed to retain its profitability despite heavy discounting, there are worries that Debenhams is entering the recession with too much debt, which stands at about £930m.
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