Granada shareholders rebel over boardroom pay deals

More than a quarter of Granada's voting shareholders yesterday declined to back the company's remuneration policy or the re-election of Charles Allen, the executive chairman.

Some 24 per cent voted against Granada's remuneration policy, with a further 7 per cent abstaining on the issue. On the re-election of Mr Allen, 16 per cent voted no, while 11 per cent abstained. The long-serving commercial director, Graham Parrott, saw 19 per cent vote against his re-election and 10 per cent abstain.

After the meeting, Mr Allen denied that the company had suffered a shareholder revolt. "It depends whether you want to portray the glass as a quarter full or three-quarters full," he said.

Shareholders at the meeting said they were deeply unhappy with Mr Allen's two-year employment contract and that of Mr Parrott. Some were also concerned that Mr Allen holds both the chairman and chief executive roles. A one-year contract is now considered best practice, while the two top roles are split under the established corporate governance codes, including the recent Higgs report.

A corporate governance director at one of Granada's top five shareholders said: "We don't believe in 24-month service contracts as a matter of policy. And we thought there was insufficient disclosure, for instance on performance targets [for directors' remuneration]."

At the meeting, shareholders repeatedly demanded that the length of Mr Allen's contract be reduced and expressed anger at the £1m pay-off given to Steve Morrison, the former chief executive, who left last year. Granada is in the process of trying to merge with Carlton. Granada shares have collapsed since it was floated as a pure media group three years ago.

One investor told the meeting: "Steve Morrison is a painful reminder of the obligation that falls on shareholders when someone on a two-year contract departs."

Another said: "This board is grossly over-remunerated.... we could do with a little more sackcloth and ashes on this board."

Mr Allen told investors at the meeting that he "shared their pain" having invested £3m of his own money in the media company three years ago, meaning that he had worked since then "for nothing". "We're not letting that pain stifle our efforts and enthusiasm to improve the company's performance," he said.

There is speculation that Mr Allen, due to be chief executive of the combined Granada-Carlton company, will not survive long after the merger goes through, which would mean a £2m pay-off under a two-year contract.

Mr Allen said contracts would be reviewed by the remuneration committee of the merged Carlton and Granada, when the deal goes through and a new board is formed.