Daejan to fend off board attack

Daejan Holdings, the property group controlled by the Freshwater family, is prepared to face down criticism over its failure to comply with corporate governance guidelines at its annual meeting later this week.

Corporate governance specialists have criticised the company's board structure, saying it fails to meet key recommendations laid down by the Hampel committee's findings on corporate governance as well as the Cadbury and Greenbury codes.

There are only two executive directors - Benzion Freshwater, who holds the positions of both chairman and managing director, and his brother Solomon. There is only one non-executive director, David Davis, who has been on the board since 1971. There is no nominations committee or remuneration committee.

The Hampel committee, which published its preliminary report last month, recommended that though there should be no fixed rules on the age or length of service of non-executive directors, there was a risk of them becoming less efficient and objective if they remained on the board for an excessive length of time. The reappointment of Mr Davis is due to be voted upon at the annual meeting on Friday.

Daejan's company secretary, Chris Morse, said the board had looked at the corporate governance issue but decided to make no changes "The board has its own views on how to manage its business and the Hampel report seemed to be moving back in that direction."

In the section on corporate governance in the company's annual report, Daejan says it does not think additional non-executive directors would benefit shareholders or that it was necessary to split the roles of chairman and chief executive: "Changes should be made when they are appropriate and in the best interests of the company, rather than for the sake of change itself."

Daejan shares have risen from pounds 12.65 to pounds 15.30 in the past year. However, over the past five years the shares have underperformed the market by 7 per cent. Daejan owns a mixture of property and is capitalised at pounds 274m.