Tony Ball, the chief executive of BSkyB, is in line for a potential pay-off of up to £5m, it emerged yesterday, as confirmation of his departure ignited speculation that James Murdoch, the chairman's son, would soon succeed Mr Ball.
Despite protests from Sky that an independent nomination committee is leading the search for Mr Ball's successor, leading shareholder groups rounded on the satellite broadcaster, warning that they would not tolerate any whiff of nepotism.
In an uncharacteristically blunt statement, Peter Montagnon, the head of investment affairs at the Association of British Insurers, said he had told BSkyB "emphatically" that the search process "must be rigorous and objective", promising: "We will hold them to account."
The City was split over the potential impact of Mr Ball's decision to step down, which paves the way for the Murdoch family to hold the company's top two positions. Kingsley Wilson, a media analyst at Investec Securities, said: "The fact that James Murdoch is likely to be appointed is what's driving the shares down." Although the stock rose 3 per cent yesterday to 639p, reflecting relief at some clarification from the company, the shares have lost ground since rumours began to circulate about the change of command.
However, Richard Buxton, a fund manager at Schroder Investment Management, said: "We're not throwing our hands up in complete horror and saying 'we must jump ship'....People need to remember that Tony Ball was an unknown quantity when he came, and now suddenly it's a disaster that he's leaving."
Mr Buxton was relaxed over whether Rupert Murdoch stepped down as BSkyB's chairman to make way for his son. "Given News Corporation's 35.4 per cent stake, whether [Rupert] is chairman or not is a slightly moot point."
A spokesman for the National Association of Pension Funds said: "If there is a case for a potential conflict of interest then the directors must act scrupulously on the appointment of a chief executive and explain to shareholders the reasoning behind it."
Sky's senior independent non-executive director Lord St John of Fawsley, the former Conservative Arts Minister, will head the nomination committee, sparking accusations from some City quarters that he lacked experience of the media industry. Fellow non-executives Allan Leighton, the Post Office boss, John Thornton, the former Goldman Sachs banker, and Gail Rebuck, chief executive of publisher Random House, also sit on the committee.
Mr Ball's potential payoff was revealed in the company's annual report, published yesterday. It showed that he was paid £2.46m last year in salary, bonuses and pension contributions. The report also stated that the terms of Mr Ball's controversial five-year contract entitled him to either a two or one-year payoff - depending on the exact nature of his departure. A Sky spokesman declined to clarify the extent of Mr Ball's golden goodbye. However, he refused to rule out Mr Ball's chances of receiving one.
Since Mr Ball joined the company in June 1999, he has been credited with almost doubling its subscriber numbers to almost 7 million, returning it to profit and overseeing a £2bn investment in new digital services.Reuse content