NAPF recommends board shake-up at Carpetright

Lord Harris of Peckham is under pressure to shake up the board of his company Carpetright to fend off criticism over his role as chairman and chief executive.

Institutional investors in the high street retailer have been told that a majority of its non-executive directors do not meet current corporate governance standards

The National Association of Pension Funds is recommending its members abstain on the votes to re-elect Lord Harris as chairman and chief executive at the annual general meeting.

The association, whose members control about £650bn of funds or a fifth of the shares on the London stock market, believes three of the non-executive directors are not sufficiently independent.

In a report that it produces for shareholders ahead of any FTSE 350 company general meeting, the NAPF says Sir Harry Djangoly, Baroness Noakes and Martin Harris do not meet its criteria for independence.

It recommends investors abstain over Sir Harry's re-election as he has served on the board for nine years. Baroness Noakes is a former employee of Carpetright's auditors KPMG while Martin Harris has previously served as an executive director.

"While we do not dispute the calibre and experience of the non-executive directors, three of the five on the board don't meet our criteria for independence," the report said.

The association also pointed out that as well as being chairman and chief executive, Lord Harris was the company's largest shareholder. "Where these roles are held by one person it is crucial there is a strong and independent non-executive element on the board," it said.

Shareholders are not expected to be vociferous in their criticism of a company which made a record profit of £52.5m in its latest year, a rise of 17.8 per cent on the back of the housing and retail booms.

An NAPF spokesman said he did not expect a shareholder revolt but added: "This is really flagging up issues for shareholders' attention that they should be aware of."

No one from Carpetright was available for comment yesterday.

The NAPF's decision to speak out over Carpetright is the latest sign that City shareholders are flexing the muscles in the face of allegations of corporate underperformance.