Yell chairman quits over Sir Fred's pension

Bob Scott, a former senior director at Royal Bank of Scotland, is to step down from his role of chairman at Yell, the debt-laden directories company, after a backlash from its institutional investors over him agreeing the £17m pension of Sir Fred Goodwin at RBS.

The news that Mr Scott, the former chairman of RBS's remuneration committee, will not stand for re-election at Yell's annual meeting on 24 July came as the publisher of the Yellow Pages directories posted a pre-tax loss of more than £1bn in the year to 31 March, following a huge writedown at its Spanish business. It is understood that institutional investors planned to vote against the re-election of Mr Scott – who has been the chairman of Yell since 2002 – at the AGM. Sir Fred's pension, equal to £703,000 a year, came to epitomise the worst excesses of UK bankers during the credit crunch.

The potential revolt over Mr Scott's re-election is the latest demonstration of shareholders' revolts against boardrooms in the UK. On Tuesday, investors in Royal Dutch Shell turned on the oil company's management, with almost 60 per cent voting against planned remuneration packages for executives.

As chairman of Yell, Mr Scott presided over the company's acquisition spree, particularly in the US and Spain, which contributed to its current net debts of £4.2bn. Yesterday, Yell posted total sales up by 8.1 per cent to £2.4 bn for the year to 31 March, but down by 4.6 per cent at constant exchange rates. John Condron, the chief executive of Yell, said the economic environment was "the toughest any of us has seen". Its adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) fell by 1.8 per cent at constant exchange rates.

The directories company revealed that its UK print revenues slipped by 10.9 per cent over the year, as small and medium-sized companies were hit by the recession. But underlying earnings in the UK rose by 2.3 per cent, reflecting improved margins resulting from its cost-saving programme, which has shaved £250m from its cost base over the past 18 months. While its print business struggled, Yell.com sales grew by 18.2 per cent to account for 24 per cent of total UK sales.

Yell swung to a pre-tax loss of £1.03bn, following a £1.27bn writedown associated with its Spanish business, Yell Publicidad, which is being hit by a brutal slowdown in Spain's wider economy. Its total pre-tax exceptional items came in at £1.38bn and also included cash restructuring charges of £95.5m related to cost reduction.

Yell increased its operating cash flow by 16.6 per cent to £730.2m and had reduced its net debt multiple from 4.9 times to 4.7 times adjusted Ebitda. But given the scale of its debt mountain, Yell warned that as a result of uncertain trading conditions, "there is a risk that the group would need to reset its financial covenants with its lenders".

It added that if the group was not able to reach agreement then the syndicate of lenders would have the right to demand "immediate repayment on all amounts". However, Yell said that its bank facilities are committed until 2011 and 2012, and that it had 15 per cent of headroom on its tightest debt covenant at the end of March.