Several of Granada's largest institutional investors are saying that if the company does not change its stance on the pounds 374,000 payments, it will risk permanent damage to its reputation. They say the executive directors should defuse the row by paying back the money they received last year in return for having their notice periods in the event of takeover reduced from three years to two.
Several large investors have contacted the media and hotels group to express their dissatisfaction with the payments. But the company is sticking by the decision of its remuneration committee that the payments are justified for the "loss of a benefit".
One senior fund manager said that the row had come at an awkward time for Granada's chairman, Gerry Robinson, who has become more of a public figure after his elevation to chairman of the Arts Council last week. "This does not get this new chapter in his career off to a good start," he said.
The fund manager added that while the sums were small in relation to the size of the company, they were still an important matter: "If the directors do not pay these sums back I think it will be remembered. Sometimes small mis-judgements add up to larger ones. And make no mistake about it this is a mis-judgement."
Institutions have not been impressed by the company's aggressive handling of the issue. Granada initially said it had received no complaints about it whereas institutions said they had registered complaints. The company has claimed that it "prides itself" on its investor relations. However, it failed to foresee the scale of the row the payments would cause.
The payments meant that Mr Robinson received pounds 138,334, Charles Allen, the chief executive, received pounds 110,000, while three other directors were paid between pounds 32,000-pounds 52,000.
John Ashworth, the chairman of the British Library, who is a non-executive director of Granada and a member of its remuneration committee, is up for re-election at the group's annual meeting on 4 February. It is possible but unlikely that he will be voted down. Ian Martin, a former senior director of Grand Metropolitan, is the chairman of the committee and may be called on to justify the payments.
But institutions say the company would be making a mistake if it let the dispute drag on that far without seeking to limit the damage in some way.