Board battle looms at Lonrho: Rowland and other directors get big pensions on top of salary - Bock likely to set up remuneration committee

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The Independent Online
AT LEAST three directors of Lonrho, including its joint chief executive, Roland 'Tiny' Rowland, and his right-hand man Paul Spicer, are receiving six- figure company pensions on top of their already substantial salaries.

The disclosure comes as Mr Rowland squares up for what promises to be an epic boardroom battle with his new German shareholder, Dieter Bock. The Lonrho board meets on Tuesday to consider proposals from Mr Bock to appoint two non-executive directors.

Mr Bock has told directors that the appointments are 'non-negotiable' and that he will take the issue to an extraordinary general meeting of shareholders if the board fails to approve them.

There was some hope this weekend that Mr Rowland might be persuaded to accept the Bock plans without a fight, but other sources said the two men had already fallen out irrevocably.

An investigation by the Independent on Sunday has discovered that Mr Rowland, 75, is receiving a pension of at least pounds 100,000 a year on top of his disclosed remuneration package of pounds 1.65m.

Mr Spicer, 65, a Lonrho deputy chairman, is believed to be receiving a pension of pounds 260,000 in addition to his remuneration of about pounds 400,000.

Rene Leclezio, 72, chairman of Lonrho, is also thought to be receiving a substantial pension on top of his salary, which is more than pounds 200,000.

Big institutional investors in Lonrho have so far been supportive of moves by Mr Bock to achieve more accountability at Lonrho and 'normalise' its affairs.

'We do support his move to introduce independent non-executive directors,' said Alastair Ross Goobey, chief executive of Postel, the pension funds of BT and the Post Office. Postel has nearly 3 per cent of the international trading group's shares.

'It would be very alarming if Bock did not get his way,' said Nigel Utley, an analyst at Nomura Research Institute Europe. 'The City wants him to exercise control. If he loses, the whole thing is back in the melting pot.'

Investors are also concerned about attempts by Mr Rowland to find a buyer for Mr Bock's shares in an effort to remove him from the company. 'The share price would drop like a stone if Bock was dislodged,' one institutional investor said.

Mr Bock is already believed to have secured the support of a number of directors, including Robin Whitten, Sir Peter Youens, Nick Morrell and Philip Tarsh.

However, Mr Rowland has strong support from a second group that includes Mr Spicer, Mr Leclezio and Robert Dunlop, the deputy chairman. Other directors are believed to be broadly neutral.

'Every move that Mr Bock has made has been a constructive one,' one influential fund manager said. 'He has taken a great deal of notice of institutional shareholders.'

The latest tension mirrors the great boardroom clash of the early 1970s, when Mr Rowland gained shareholders' support for the removal of eight directors who opposed his methods. The row led to an extensive investigation by the Department of Trade and Industry.

'If Mr Rowland left', another institutional investor said, 'the Lonrho share price would go sharply better.'

Already, Mr Rowland is believed to have organised a war cabinet, comprised of sympathetic directors, to defeat Mr Bock's efforts to introduce more accountability into the affairs of Lonrho, one of the most secretive companies in the British business community.

Mr Bock, a German businessman, is determined to bring Lonrho into line with standard commercial practice after acquiring an 18.8 per cent stake earlier this year. Shortly after making his pounds 130m investment, he became joint chief executive, working alongside Mr Rowland.

As part of his plan to 'normalise' Lonrho, Mr Bock is insisting on the immediate appointment of two non-executive directors to the board. They are Peter Harper, a director of Hanson, the Anglo- American conglomerate, and Stephen Walls, chairman of Albert Fisher, the food processing and distribution group.

Their appointment was held up at a Lonrho board meeting on 7 October because Mr Leclezio and Mr Rowland wanted to meet and interview the two men.

Lonrho will announce its decision on their appointment on Tuesay, after Mr Rowland and Mr Leclezio have met the men.

In the City it is widely believed that Mr Bock plans to introduce at least four non- executive directors to the board to monitor and advise Lonrho on best City practice. With the board of 12 executive directors reconstituted to include four non-executives, four existing directors would have to leave.

Mr Bock's plans would almost certainly involve setting up formal remuneration and audit committees, regarded as standard practice in most public companies.

Non-executive directors would be required to examine and approve the remuneration and perks of executive directors.

If the two non-executive directors are approved, Mr Bock would secure a clear majority on the Lonrho board, enabling him to push through changes with much greater speed than he has achieved so far.

However, he would not be able to remove Mr Rowland, orany other director, without convening a meeting of shareholders.

The company's articles of association make it impossible to remove any director without the unanimous approval of the board - something that would be virtually impossible for Mr Bock to secure.

There have been rumours of disagreements between Mr Bock and Mr Rowland before, notably over asset disposals including the pounds 30m sale of a property in Brussels.

(Photograph omitted)

Jeremy Warner, page 2

Final shootout, page 3

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