Pru in row over board re-elections: Consultants advise against three big names

PENSIONS & Investment Research Consultants is advising its pension fund clients not to support the re-election of three directors of Prudential Corporation because the life insurer's board does not meet the Cadbury corporate governance guidelines.

Prudential is believed to be angered at Pirc's advice since it is directed against Sir Trevor Holdsworth, Niall FitzGerald and Andrew Teare, all of whom are leading businessmen.

Pirc is advising its clients, which manage pounds 54bn of UK investments, to abstain on the votes at next week's annual meeting to re-elect the three directors, on the grounds that they are not independent. Pirc levels this criticism against all but one of the Pru's seven non-executives.

The consultants point out that Prudential, the largest investor in the UK stock market, has disclosable stakes in the companies run by Sir Trevor, Mr FitzGerald and Mr Teare.

Prudential owns 4.1 per cent of Allied Colloids, the chemical company chaired by Sir Trevor, who is a former president of the Confederation of British Industry. It owns 6 per cent of Unilever, where Mr FitzGerald is an executive director. And it has a 5.3 per cent stake in English China Clays, whose chief executive is Mr Teare.

Pirc also raises similar objections against Mary Baker, a Pru director who is on the board of Barclays Bank, and Sir Alex Jarratt, deputy chairman of the Pru but also a director of Smiths Industries.

A Prudential spokesman said Pirc's objection was slightly absurd since the Pru's size meant it had large holdings in most leading companies. The logic of Pirc's criticism might suggest Prudential should only appoint non-executives from among the management of those companies in which it would not consider investing.

Stuart Bell, Pirc's research director, said he did not object to the presence of Sir Trevor and the others but he wanted to see a range of directors able to exercise independent judgement. Because of the Pru's position, 'achieving the Cadbury threshold is going to require some slightly different approaches'.

Mr Bell said: 'Non-executive directors are largely limited to the executives of other companies. There is an argument that the pool should be widened to include people from academic backgrounds or the public sector who have other types of management or business skills.'

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