NAPF urges protest vote over Liberty chief's re-election

Liberty international and Carlton Communications yesterday became victims of the heightened vigilance in the City over corporate governance, with the heavyweight National Association of Pension Funds advising shareholders to block key votes at their AGMs next week.

The NAPF said institutional investors should not support the re-election of Donald Gordon as chairman of the shopping markets group Liberty.

It also attacked the company's record on non-executive directors, saying shareholders should abstain on the re-election of Mr Gordon's son, Graeme Gordon, and Michael Rapp as non-executive directors at the annual general meeting on Wednesday because they are not independent.

The move comes after Mr Gordon launched a high-profile attack on the Higgs review of corporate governance, a document the NAPF supports.

Mr Gordon said aspects of the Higgs report could be a "nightmare" for business. He was particularly scathing about Derek Higgs' view that non-executives should only serve for six years because after that they compromise their independence by being too close to the company.

"It takes five years for non-executives to get to know the business and then probably half are no good anyway. We are not a business school," he said.

The NAPF said Graeme Gordon was "not considered to be independent because he is the son of the chairman". It added that it believed only one of the company's non-executives met its criteria of independence, Robin Buchanan.

Under Higgs, which will be incorporated into the Combined Code by 1 July, a board should be comprised of a majority of independent non-executives.

Carlton Communications is also set to face more shareholder disgruntlement. The NAPF advised that investors should not support its remuneration report, citing a lack of information on the criteria for performance-related pay.

Carlton is trying to merge with its rival broadcaster Granada in a deal which is currently before the Competition Commission. On Wednesday, 16 per cent of Granada shareholders opposed the re-election of its chairman, Charles Allen, and 24 per cent voted against his two-year rolling contract.