Mr Rubin will split his roles next year but has risked the ire of institutional investors and corporate governance experts with the promotion of his son, Andrew.
The move follows similar controversial appointments at Next, where chairman Lord Wolfson appointed his 29-year-old son Simon as a director of the FTSE 100 company earlier this year. Lord Hanson also made his young son Robert a director of the conglomerate before it was demerged.
Andrew Rubin, a Harvard business school graduate, has been with Pentland as marketing director since 1995. Stephen Rubin, 59, and who owns 56 per cent of Pentland's shares, himself worked for his father at Pentland, joining the company when he was 21.
In another move which raised concerns about the independence of Pentland's non-executive directors, the company has appointed John Quelch to its non-executive board. Mr Quelch was a professor at Harvard and a former non-executive director of Reebok, the footwear business which Pentland bought in 1981 for pounds 50,000 and sold for pounds 400m 10 years later.
Mr Quelch joins Robert Shepherd, now a non-executive director but previously an executive on Pentland's board between 1972 and 1992.
"They are running this company like it is a private business and ignoring the shareholders," complained one institution, pointing out that Pentland shares have underperformed the market by more than 40 per cent since it floated in 1989.
Manifest, the corporate governance body, was concerned about the news. Adam Kay of Manifest said: "Though this is technically a split between the chairman and chief executive roles, shareholders will note the obvious familial link. If I were a shareholder I would want to see a nomination committee. The independence of Mr Shepherd has to be in question."
Another leading shareholder said that with a 56 per cent shareholding, the Rubin family could ignore the wishes of the minority shareholders: "If you buy shares in this company you have to recognise that it won't be run by the same rules. That's life. If this were a normal company with family controlling a minority stake, it wouldn't be a source of comfort. On the whole you want someone promoted on merit, not because he is the chairman's son."
Though a spokesman for Mercury Asset Management confirmed that Pentland had sought and received approval for the appointment, another leading institution denied that it had granted tacit approval: "That is misleading. We have had discussions and we have been told about it. "
Stephen Rubin defended the appointment: "We are a family business, but it is important to say that we did get full approval from our shareholders and our non-executive directors."
Comment, page 21
Keeping it in the family: How the son also rose at Next and Hanson
He was appointed to the board of Next by his father, Lord Wolfson of Sunningdale, in February this year at the age of 29.
It was a controversial appointment that made him the youngest director of a FTSE 100 company. He joined Next in 1991 when he was 23.
His first job was as sales manager of Next Retail, which then had 312 stores. When Next combined the retail division with the mail order division, Next Directory, in 1993, he became sales and marketing director of the Next brand.
Next's institutional investors and City analysts expressed concern at the new appointment, saying it `left a bad odour' and could backfire.
Lord Hanson was unafraid of accusations of nepotism, appointing his Eton and Oxford-educated, polo-playing son Robert to the industrial conglomerate's board in 1992 at the age of 31. The appointment, after years of speculation about the group's succession, sent Hanson's shares into reverse.
Lord Hanson also gave a board position to his niece's husband, Christopher Collins. Robert, whose previous career included a spell at the merchant bank NM Rothschild, was put in charge of Hanson's search for expansion opportunities in the Far East. In 1995, he became corporate development director, replacing Mr Collins who moved up to become vice-chairman. He remains in the same post at the Hanson rump following the recent demerger.Reuse content