Directors of the multi-utility group are to hold an emergency board meeting tomorrow to discuss the unprecedented shareholder revolt that began last month when the company ousted Brian Staples, chief executive, after a spectacular boardroom split.
United Utilities yesterday sought to play down speculation of another rift involving Sir Desmond, this time with Sir Peter Middleton, the non- executive director who has been taking private soundings with the group's leading shareholders. The meetings were organised by Dresdner Kleinwort Benson, United's broker.
Most institutions have told Sir Peter they wanted to see Sir Desmond leave by the end of the year, although the responses were said to be "less extreme" than reports had suggested.
Sources close to United stressed that the board meeting might not resolve the issue immediately, but admitted that Sir Desmond had little hope of staying as executive chairman until his official retirement date of 2000. One option being canvassed was that he would leave the company by Christmas, a move which would satisfy most institutions by establishing an orderly succession process.
It would also change the complexion of the review into the group's operations launched last month by Derek Green, who replaced Mr Staples as chief executive. Mr Green, 57, ran United's core utility businesses, North West Water and Norweb and is also due to retire in 2000.
The review, which will be completed by October, will now spend much more time on the succession issue. The company is almost certain to bow to shareholder pressure and downgrade the job of chairman to a non-executive role.
Sir Desmond was given the results of Sir Peter's meetings late last week and was said to be "not at all dismayed" by the criticism. However sources suggested he had begun to accept that he could not stay with the group until 2000. "He's a fighter, but he's also a realist. He'll be in listening mode. These are the views of our owners and they have to be heard," one said.
Another factor working against Sir Desmond is the arrival next month of Sir Richard Evans, chief executive of British Aerospace, as a new non- executive.
Sir Richard is understood to be anxious that the Pitcher issue is resolved by the time he joins the board.
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