Smurfit ready to give up power

RUSSELL HOTTEN

Michael Smurfit, chairman and chief executive of the Jefferson Smurfit paper and packaging empire, is ready to bow to institutional pressure for him to give up some of his power.

Mr Smurfit is planning to announce, possibly as early as this week, the creation of a new role of chief operating officer and president, which would enable him to relinquish his chief executive's title.

Jefferson Smurfit's key shareholders, particularly Standard Life, will be watching closely to see who is appointed and the effect on Mr Smurfit's influence in the boardroom.

The move is further indication of the way some of the UK's larger fund managers are flexing their shareholder muscles.

There was speculation last night that Ray Curran, recently elevated from chief financial officer to finance director, was emerging as the frontrunner for the chief operating officer's job. However, the appointment of someone from outside the company is preferred by some institutions.

Mr Curran's appointment as finance director is thought to have been made after pressure from Irish and UK fund managers worried about the Smurfit family's power on the board. Four Smurfits hold influential positions at the company, and a fifth, Michael Smurfit Junior, is managing director of a key US subsidiary.

Alastair Ross Goobey, head of Hermes, one of the country's leading fund managers and a Jefferson Smurfit shareholder, has publicly voiced his concerns about corporate governance. He said last night: "We prefer to have the role of chairman and chief executive split. But much more important is the balance of power on the board."

Jefferson Smurfit has beefed up the number of non-executive directors with the appointment last month of the former Irish Prime Minister Albert Reynolds.

Standard Life, which owns 2 per cent of the UK stock market, has been in the forefront of campaign by institutions to influence corporate governance at large companies. It is one of several investors to have passed on its concerns to the Smurfit board.

Mr Smurfit is believed to have been planning to announce a new chief operating officer at the time the company unveils its results on 10 April. However, sources said yesterday that this could be brought forward.