Coming out squarely in favour of two dissident non-executive directors, whose removal Emap's management is seeking at an EGM next Monday, Pirc said shareholders should oppose the proposals.
"If the two non-executives are removed, it establishes a damaging precedent in corporate governance," Pirc said. "Fears of removal will inevitably undermine the independence of directors."
The two directors believe they are being targeted because of their opposition to controversial changes to Emap's rules on non-executive directors last summer. Eighty-two per cent of shareholders agreed to new rules that would give the board the right to remove directors without specific shareholder approval on a vote of 75 per cent of the board. They also agreed to a new minimum of three rather than five independent directors.
Anne Simpson, head of Pirc, said the company had been "disingenuous" in its claims that the changes were in line with the common practice of other companies.
The watchdog published the results of a survey of 129 companies, including all of the the FTSE 100, which showed only 9 per cent had provisions similar to Emap's.
Emap shot back, claiming that Pirc had "ignored much of what we had to say when it did not suit them". Emap believes that its attempt to remove the two directors, Joe Cooke and Ken Simmonds, is consistent with the principles of good corporate governance, and that the two men had been too long on the Emap board - 27 years between them - and that they had refused a compromise offered to them at a special board meeting early this month.
A spokesman added that of FTSE 100 companies, both Marks & Spencer and Prudential had similar provisions on the removal of directors. "That puts us in very good company," the spokesman said.
Pirc said that the removal of the two directors was linked to succession plans at Emap, a view dismissed by the company. There have been reports of disagreements between the chief executive, Robin Miller, and the managing director, David Arculus, in advance of the retirement of Sir John in 1998. In its statement yesterday, Pirc claimed that "it is not in shareholder interests that [the directors] be removed before the succession issue is resolved."
The Emap spokesman said the removal of the dissident directors "has nothing to do with succession. There are no decisions taken about who will replace the chairman".Reuse content