Cable & Wireless investors urged to oppose pay plan

* Pirc urges a no vote against incentive plans

* Investors told to oppose pay report, chairman re-election

* Top ten investor says row is damaging company image

By Raji Menon

LONDON, July 7 (Reuters) - Cable & Wireless (CW.L) is under pressure again over pay deals offered to directors, after advisory firm Pirc urged investors to oppose plans to extend a controversial incentive plan.

The plan, which also came under fire from a top 10 shareholder, has led to a "red top" alert from the Association of British Insurers (ABI), its most serious warning indicating a breach in corporate governance best practice.

ABI members own 15 percent of the UK stockmarket.

In a note to its institutional investor clients, Pirc said: "The reason for the extension of the scheme is solely for the benefit of the executives involved and we therefore recommend opposition to this resolution."

Telecoms group C&W operates two incentive schemes but it is the Long Term Incentive Plan (LTIP) which angered investors when it was introduced three years ago, which has sparked controversy.

Pirc labelled the LTIP: "A cash based incentive of a type usually found in a private equity speciality finance company, whose performance conditions are vague."

The corporate governance body is also urging a 'no' vote at the July 17 AGM on the company's remuneration report -- which it said has the potential to be "excessive" --- and on the re-election of Richard Lapthorne as chairman.

Pirc said Lapthorne appeared to enjoy executive status, highlighting an award of 5.5 million shares under an incentive plan in 2007, bringing into question the separation of powers at the head of the company.

The criticism follows growing investor anger over pay and bonuses. In May, Shell (RDSa.L) became the fourth London-listed company to face opposition over its remuneration report this year; the others being Bellway (BWY.L), Royal Bank of Scotland (RBS.L) and Provident Financial (PFG.L) [ID: nLJ945281]

"NOT IDEAL"

The top ten shareholder in Cable & Wireless, who requested anonymity, said: "In the pretext of extending this scheme, they are probably paying these executives too much because they are giving them more shares in another scheme at the same time.