Marconi, the troubled telecoms equipment manufacturer, yesterday pledged a wide-ranging review of its operations and executive pay arrangements after a stormy annual meeting dominated by calls for the entire board to resign.
The re-election of three directors, the chief executive Lord Simpson of Dunkeld and the non-executives Sir Alan Rudge and the Hon Raymond Seitz, was voted down on a show of hands by the 1,000 shareholders packed into the QE2 Centre in Westminster. Lord Weinstock, the former managing director of GEC, was among those opposing re-election of the two non-execs. But they were re-appointed by majorities of more than 90 per cent after a poll of proxy votes, however, more than half of Marconi's institutional investors abstained in a show of silent protest.
Shareholders queued up to berate the board for its botched profits warning earlier this month, the disastrous plunge in the Marconi share price, the multi-million pound pay packages earned by its top directors and the 4,000 job losses announced two weeks ago.
The pay review will be undertaken by Derek Bonham, the new non-executive director who will chair Marconi's remuneration committee. It will examine basic pay levels for Lord Simpson, who earned £1m last year, and the group's share option arrangements. The operational review will be carried out by Lord Simpson and will take two months. It will focus on bringing Marconi "back to basics" by driving down costs, generating extra cash and disposing of peripheral activities.
But the promise of action was not enough for most shareholders who urged the board to "consider their consciences" and resign for the "destruction of value" they had presided over. Marconi shares have fallen by 90 per cent in the last year.
One shareholder said: "You boys get paid an awful lot of money. You expect to get top dollar and we expect to get top performance." Another shareholder said: "It seems to me that you haven't been keeping you eyes on the road." Another accused the non-executives of "fiddling while Rome burnt". One investor told the meeting: "Marconi is a sick company which needs treatment and the first course of medicine is to get rid of George Simpson."
John Mayo, the chief executive-designate who was forced to quit two days after the profits warning, failed to turn up after receiving assurances that he would not be fingered for the disaster. Sir Roger Hurn, the Marconi chairman, told shareholders: "There has been a great deal of press speculation about the change in our succession plans and John Mayo's resignation, much of it unfair to John. I want to make it clear that John Mayo worked honestly and tirelessly for the benefit of the company throughout his time here. There is absolutely no question of wrongdoing on his part."
There was disbelief at Sir Roger's explanation for why Marconi had had to suspend dealings in its shares for an entire day pending the profits warning – a move which contributed to the collapse in its share price the following day. Sir Roger said it was to prevent a false market in its shares after the early morning announcement of the sale of its medical systems business. But one shareholder said: "You should never have suspended the shares. I know that and everyone in this room knows that."
Speaking outside the meeting, Roger Lyons, general secretary of the white-collar MSF union, said all the directors were culpable and had pursued a reckless strategy. "It is not enough for Mr Mayo to fall on his sword. The sword needs to be passed around the whole boardroom."Reuse content