Emap wins vote against dissidents

Boardroom bust-up: Non-executives revolt against decision to oust directors without shareholder approval
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The Independent Online
Controversial proposals to make it easier for media group Emap to sack directors without shareholder approval were narrowly approved yesterday amid an unprecedented public revolt by two disaffected non-executives.

Kenneth Simmonds, a London Business School academic, and Joe Cooke, vice- chairman of the Telegraph newspaper group, told Emap's annual meeting that the resolutions were against shareholders' interests and represented "a retrograde step" in corporate governance.

But the resolutions, to cut the minimum number of non-executives required on the board from five to three and to allow a 75 per cent board majority to remove directors without having to go to investors, were eventually carried by 82 per cent of votes cast at the meeting. A 75 per cent majority was needed.

A full count was necessary after a show of hands initially blocked the changes. All told, votes speaking for only a third of Emap's equity voted in favour of the proposals.

Apart from the two dissident non-executives, former Emap chairman Sir Frank Rogers also opposed the changes. They were joined by Anne Simpson of Pirc, the corporate governance consultancy, who said some of the institutional investors holding up to 12 per cent of Emap that she advised would also vote against the motion.

Mr Simmonds, a professor of marketing and international business at LBS, said the proposals meant non-executive directors could be removed without reference to shareholders. "Replacements would almost certainly be of the same mind-set as the board," he said. "This gives less protection to shareholders should an entrenched board fail to perform."

At present all of Emap's directors have to vote in favour of removing a non-executive from the board.

Emap, which currently has a 13-man board, seven of whom are non-executives, was clearly embarrassed by the very public and personal nature of the debate, but it denied there would be any recriminations after the vote. "Non-executives are not about to be fired," a spokesman said.

Emap had already assured the Association of British Insurers that the changes amounted to nothing more than bringing Emap into line with best practice.

Sir John Hoskyns, Emap's non-executive chairman, told shareholders the changes to articles of association regarding non-executive board members brought the company into line with other large UK companies, including Barclays, Lloyds Bank, Granada, Marks & Spencer and the Prudential.

"If your company is wrong about these proposals then so are the others," he claimed. "The quality of non-executive directors is more important than their quantity."

However, Pirc's Ms Simpson rejected Sir John's arguments about corporate governance: "Common practice does not mean best practice," she argued.

The changes to Emap's articles were drawn up by Sir John, who also chairs the Burton retail group, and chief executive Robin Miller.

But Professor Simmonds claimed investors had been kept in the dark. "Shareholders have not had a good clear picture of what is involved. There was no canvassing of opinions, the board rejected a minority letter being sent out and our objections were only included when it was pointed out that otherwise the chairman's statement would be misleading."

Sir John denied he was involved in what he caricatured as "a sinister plot to sack half the board and instal a new chairman."

He added: "We have got to be careful in this politically correct field of corporate governance."

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