Bloomsbury founder faces AGM showdown over splitting role

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The Independent Online

Nigel Newton, the founder of Bloomsbury Publishing who discovered Harry Potter, is heading for a showdown with the group's investors over his combined chairman and chief executive role.

Nigel Newton, the founder of Bloomsbury Publishing who discovered Harry Potter, is heading for a showdown with the group's investors over his combined chairman and chief executive role.

Research Recommendations and Electronic Voting (RREV), the powerful shareholder advisory service, urged investors yesterday to abstain from a vote to re-elect Mr Newton at its annual meeting on 30 June. Tim Sawyer, RREV's chief executive, hopes a strong abstention vote will prompt Bloomsbury to "think again" about splitting Mr Newton's role. "It would be foolish to say we don't support his re-election but we wanted to send a message to say we're not happy."

The publishing house, which is heading for a record year buoyed by a sixth Harry Potter novel, argues that because Mr Newton is Mr Bloomsbury he deserves to be let off the hook for breaking the Higgs code on corporate governance.

"Mr Newton argues that publishers want to speak to him and no one else," Mr Sawyer said. "But we believe a chairman should be appointed to manage the board and deal with corporate governance and let him [Mr Newton] get on with what he's good at. There needs to be a balance of power - someone to make sure the company is running well and someone to make sure the board is checking up on what he's done."

Bloomsbury came in for further criticism from RREV for not putting Paul Scherer, its senior independent director and deputy chairman, up for re-election. Had it done so, RREV, which is controlled jointly by Britain's National Association of Pension Funds and Institutional Shareholder Services of the US, said it would have advised shareholders to vote him off the board. It does not consider him to be independent because he has been on the board for so long. He also used to chair a company close to Bloomsbury.

A company spokesman said: "We take RREV's points well but also this is a company that has performed well."

Bloomsbury published JK Rowling's first Harry Potter book in June 1997, one year after the manuscript landed on Mr Newton's desk. The company recently predicted its pre-tax profits would top £20m this year due to unprecedented demand for Harry Potter and the Half-Blood Prince, which will hit the shops at midnight on 16 July.

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