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Cable & Wireless confirmed on Wednesday that Richard Lapthorne is to receive a minimum of £10m in three years’ time if performance targets at the telecommunications group are met under the terms of a new pay scheme.

The controversial scheme may lead to a confrontation between the shareholders and the company following last year’s argument over an earlier scheme designed to pay executives high rewards.

The new package comes just a year after Mr Lapthorne sparked investor fury over a scheme he promoted that will pay private equity-style rewards to the group’s top executives.

Under the new scheme Mr Lapthorne will be awarded 5.5m new shares at Tuesday’s closing price of 199p, in addition to the 3.5m he already owns.

The scheme will run for next 3 years and as long as the company’s total return to shareholders is in the top tier of a peer group of global telecoms companies Mr Lapthorne will be able to remunerate the value of the shares.

Mr Lapthorne will also move from a fixed three year contract to an annual rolling plan which will see him put up for re-election at each annual general meeting.

C&W is also proposing to remove the £20m cap it has on the rewards of senior executives under the long term incentive pay scheme launched last year.

The decision to remove the cap was taken following the recovery in the company’s share price. In the last year the shares have doubled and the company said last month that the turnround was running ahead of schedule with core profits rising by 20 per cent. It was feared that the cap, which was introduced at the launch of the incentive scheme, would act as a brake on the management’s plans.

“The concern is that the cap may start to inhibit the performance of the senior management team and make them more risk averse and inhibit the growth in further shareholder value,” said a company spokesman.

The scheme, introduced by Mr Lapthorne last May, sought to accelerate the group’s recovery. It enabled C&W’s top 60 executives to share a bonus pool of up to £216m if the share price more than doubled to 228p by 2010.

It could pay out earlier if the company is sold or demerged.

Under last year’s scheme, John Pluthero and Harris Jones, the managing directors of the UK and international businesses, stand to receive up to £20m each.

Mr Lapthorne, who is paid a basic annual salary of £386,000, was excluded.

Shareholders will be able to vote on the scheme at the annual meeting on July 20.

Pay experts and shareholders said the company’s proposals were likely to provoke resistance among shareholders, who largely disapprove of performance-based incentive schemes for non-executives and chairmen of companies.

Katharine Turner, principal at Towers Perrin, pay consultants, said: “It is very unusual for a part-time chairman to participate in an incentive arrangement.”

The scheme has been designed, in part, as a retention measure.

Mr Lapthorne, who has chaired the group since 2003, is overseeing an ambitious strategy of recovery for the group, which had underperformed and issued a series of profits warnings over several years.

Legal & General Investment Managers, one of the group’s largest shareholders, applauded last year’s scheme as original and innovative. However, several shareholders opposed the scheme on the basis the performance targets were not stringent enough. The Association of British Insurers said the plan did not “go far enough in linking reward to long-term value creation”.

On Wednesday C&W share opened ½p lower at 198½p.

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