Threat of shareholder revolts over TV pay-offs

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Shareholders are to demand a shake-up of the remuneration committee at BSkyB, after the satellite broadcaster revealed it would pay Tony Ball, its departing chief executive, £10.7m not to join a rival for two years.

The "non-compete" agreement has raised the ire of the Association of British Insurers, which says the payment was approved by a committee dominated by representatives of Rupert Murdoch's News Corporation, which owns 34 per cent of BSkyB. Mr Murdoch is also chairman of BSkyB.

The new row comes as a second broadcaster, Carlton Communications, risks upsetting its investors with a pay-out of an estimated £1.4m to Michael Green, the company's founder, who has been forced out of his position as chairman-designate of the merged ITV. Details of the compensation plus a pension fund top-up for Mr Green are expected today.

The details of Mr Ball's payment were revealed in a US regulatory filing late on Friday. It says he will be paid £10.7m for waiving share options and agreeing not to work in UK television until 2006.

The ABI - which represents some of the City's biggest investors - said the size of the payment raised corporate governance questions and put the spotlight on the functioning of the remuneration committee. BSkyB had already raised shareholders' hackles by the manner in which it replaced Mr Ball with James Murdoch, the chairman's son, ahead of the company's annual meeting last month.

A spokesman for the ABI said BSkyB has since committed to having a proper dialogue with shareholders and that its non-executives would represent all shareholders' interests, not just those of News Corp.

"The composition of the remuneration committee comes up in this context, and the non-compete fee is emblematic of the way in which people are concerned over corporate governance," he said.

The BSkyB remuneration committee is chaired by John Thornton, an independent non-executive, but includes Rupert Murdoch and David DeVoe, a News Corp veteran, among its five members.

Lord Wilson, the former Cabinet Secretary, is conducting a review of corporate governance for the company.

Carlton Communications is also under pressure to explain the pay-outs to Mr Green, which will be set out in the listing particulars for ITV - the company being formed through its merger with Granada - which are being mailed to shareholders today.

The influential National Association of Pension Funds said yesterday that it was likely to demand an explanation of the pay-out to Mr Green, which comes despite his having no written contract at Carlton.

As well as a lump sum expected to be equivalent to a year's salary and bonus, around £1.4m, there will be an additional payment into Mr Green's pension pot and he may also have millions of options converted into shares.

Carlton said that, although Mr Green had no written contract with the group, it was legally bound to act as if he did and the size of the pay-out was not excessive compared with others in the sector.