Pension funds urged to oppose re-election of WH Smith chief

Richard Handover, the chief executive of WH Smith, has a fight on his hands over his re-election at the company's annual meeting this month, with the National Association of Pension Funds leading a revolt.

The association, which represents more than £700bn of institutional funds, is recommending its members abstain from the resolution at the company's AGM on 29 January to re-elect Mr Handover on the basis of his rolling two-year employment contract.

Should Mr Handover leave the company, he would be entitled to a two-year pay-off, which the NAPF believes is an excessive perk. Last year he earned £665,000.

The NAPF is also flagging concerns over WH Smith's plans to offer bonuses to directors that oversee the completion of a major project, such as the disposal of a business. The NAPF does not believe these bonuses are justified. The independence of WH Smith's senior independent director, Michael Orr, is also being called in to question.

Mr Orr, who chairs the group's remuneration committee and is paid £39,000 a year, has served on the board for more than nine years. The NAPF believes this is too long to retain independence.

A WH Smith spokeswoman for said the company was aware of the concerns, but that Mr Handover's contract was not worth changing as he is retiring in 2006. She said Mr Orr was too valuable a board member to consider removing.

The board of the gas company BOC is facing similar criticism over the impartiality of its independent directors. The NAPF is advising members not to back the appointment of Matthew Miau, a Taiwanese entrepreneur, and Roberto Mendoza, chairman of the internet bank Egg. The NAPF says the pair, who sit on BOC's remuneration committee, have close business links with BOC.

Mr Miau was appointed to BOC's board last January and is a former managing director of BOC Lienhwa Industrial Gases, a joint venture in Taiwan in which BOC has a 50 per cent stake. Mr Mendoza is a former vice-chairman of JP Morgan, the group's investment bank.