Cable & Wireless is on course for another bruising encounter with investors and unions after a management shake-up saw the amount payable to its UK head increased by £5 million.

C&W, which has already enraged investor groups with its private equity-style incentive scheme, disclosed that John Pluthero now stands to gain a further £5 million payout if he meets certain targets. He has already amassed a notional £15 million.

The rise in his potential reward pool was triggered by C&W’s ousting of Harris Jones, the group’s international head and another participant in the bonus scheme. Mr Pluthero now adds the chairmanship of the international business to his domain – and, with it, half of the remaining bonus pool owing to Mr Harris.

In a move that further enraged investors, Mr Jones, who joined C&W in 2004, will leave with a £5 million payout - including the £4.3 million that he has accrued under the private equity-style scheme.

He will receive the money even though his departure came amid a weakening performance in the international division, in which guidance for full-year earnings before interest, tax, depreciation and amortisation (ebitda) was downgraded by $20 million (£9.7 million) to between $820 million and $840 million.

The Association of British Insurers (ABI), whose members hold up to a sixth of all investments traded on the stock market, said that the latest revisions to C&W’s remuneration scheme appeared to be “quite unusual”. Peter Montagnon, the ABI’s director of investment affairs, said that he would be “looking into them”.

C&W’s move immediately triggered a fresh debate about excessive executive rewards. It also overshadowed an otherwise strong set of half-year results from C&W, in which it beat forecasts with a 29 per cent rise in underlying first-half core earnings to £284 million. The company also revealed that successfully turning around its UK division should see it turn cashflow-positive in the second half of the 2007-08 year.

C&W introduced its private equity-style incentive scheme in April 2006 as the final piece in a plan by Richard Lapthorne, the chairman, to turn around the struggling telecoms group. About 60 directors stand to benefit.

Under the scheme, no payout should be made until April 2009, with the balance paid in 2010 or earlier if a full demerger or sale happens.

C&W said that Mr Jones had received his payout on departure because he was a “good leaver”. He deserved the money because of his work in driving up the market capitalisation of the international division by more than £1 billion.

C&W said that the transfer of the “bonus pool” reward meant that Mr Pluthero now stood to gain an additional £5 million on top of the £14.8 million that he had already notionally accrued in March.

Mr Lapthorne said of Mr Jones’s payoff: “This is good value, given the value he has created.” The reward was small compared with the potential rewards in private equity, he added.

Mr Pluthero, when asked whether he felt his individual efforts were worth so much, said: “That is easy for met to answer in the affirmative. I don’t make any money unless our shareholders make a whole lot more.”

At its annual meeting this year, C&W saw off a shareholder revolt over its decision to remove a £20 million cap on the incentive scheme for executives, including Mr Pluthero.

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