EMI shareholders urged to eject Alain Levy

City shareholders in the entertainment giant EMI are being urged to eject its two senior directors from the board in a row over pay.

In a highly unusual move, the National Association of Pension Funds is recommending that its members vote against the re-election of Alain Levy, the head of the recorded music division, and Roger Faxon, the finance director.

The NAPF, whose members control about £650bn of funds or a fifth of the shares on the London market, said yesterday it had taken its stance over "a point of principle".

EMI's annual report reveals that the two directors would receive one year's full pay on termination of their contract – but double that if the company were taken over.

This would mean Mr Levy receiving around £3m and Mr Faxon £1.2m. Yet a takeover – or a change of control, in City terminology – could occur whether EMI has performed well or not.

An NAPF spokesman said: "The issue is that they have contracts which potentially mean that they would benefit from a change of control – if they had to move on, in other words. Usually a change of control means that the company is weak or is badly managed and it seems to us wrong that this should lead to a higher pay-off."

The NAPF produces a report on all FTSE-350 companies ahead of their annual meetings and normally recommends abstention if is concerned about an issue.

"This is a point of principle," the NAPF spokesman said. "We are highlighting issues shareholders should be aware of and we are saying vote against."