The revised pay structure comes three months after C&W split its business in two and would see the fortunes of about 60 senior executives aligned much more closely with the company’s share price.

Richard Lapthorne, C&W’s chairman, has written to shareholders seeking approval for the new scheme. This could net John Pluthero and Harris Jones, managing directors of the company’s UK and international units respectively, as much as £22 million over four years.

The scheme’s remaining beneficiaries could share a further £176 million in payouts if targets are hit. Chief among these is a rise in the share price from 100p on Friday to more than 220p.

A 120p rise in C&W’s share price would increase the company’s market capitalisation by £3 billion.

In his letter to shareholders, Mr Lapthorne said that the new incentive package would be critical if the company was to boost the value of each unit as a distinct operation.

“It will provide a clearer link between the performance and reward for the executive, while retaining alignment between the interests of executives and shareholders,” he said.

C&W has been rumoured as a potential private equity takeover target, although no formal approach has been made to the company.

Mr Lapthorne is thought to be planning the private equity-style compensation scheme in part to reduce the likelihood of shareholders accepting any venture capital bid that may emerge.

Tony Rice, group managing director and finance director, and George Battersby, group human resources director, are among the other senior executives who could receive multimillion-pound windfalls.

Mr Rice could receive as much as £8.5 million at the end of the four years and Mr Battersby £5 million.

Under the terms of the incentive package, the 60 senior executives need to increase the value of the company by at least 8 per cent a year. They will be entitled to share one tenth of any price increase above that level.

C&W issued its second profit warning in four months in February and has shed 2,000 staff since the end of 2004. Up to 3,000 more redundancies are planned for Britain.

Francesco Caio, the chief executive, was ousted after the second profits warning, which sent the shares down by 12p to 102p. Six years ago, the shares stood at 1,561p. A week later, C&W severed ties with Charles Herlinger, its finance director.

Mr Caio was effectively replaced by Mr Pluthero and Mr Jones, who head the two units of C&W following the split.

C&W, which is BT’s main competitor, has suffered badly in recent years because of overcapacity in the market for supplying telecoms services to businesses.

Meanwhile, Mr Herlinger has been held responsible for poor financial controls in C&W, which hid a drop in underlying profitability. As a result C&W was forced to admit in February that its 2007 profit would be £100 million less than analysts had expected, largely because of so-called non-recurring revenues.

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