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Investors grill M&B chairman over boardroom vacancies

• Chairman Bob Ivell promises ABI to appoint new directors soon
• Fears about obstruction by top investors with 42% stake persist

The caretaker chairman of pub group Mitchells & Butlers has been summoned to a crisis meeting with a powerful group of City shareholders amid concerns that the company is struggling to refill its depleted board following a string of independent director resignations.

Bob Ivell met the Association of British Insurers, which represents institutional shareholders, just over a week ago where he is understood to have promised to redouble efforts to recruit independent directors.

He told them he was aware that some investors feared that billionaire shareholders Joe Lewis, JP McManus and John Magnier – who together hold 42% of shares – appeared to be exerting undue control over the business. The veteran pub operator promised to meet all other significant shareholders to offer assurances that their interests would be protected.

Six weeks ago the latest round of M&B boardroom resignations left the company with just five directors, two of whom are Lewis’ designated representatives. The posts of chairman and chief executive are filled on an interim basis by non-executives following director departures.

Ivell’s three predecessors – former Hamleys boss Simon Burke, ex-Debenhams chairman John Lovering and onetime Safeway finance director Simon Laffin – resigned from the role of chairman at M&B having become frustrated at not being able to make the independent director appointments they wanted.

Ivell only joined M&B in May and was declared to be a “new independent non-executive” by the company shortly afterwards. Some shareholders were quick to note, however, that he had links to McManus and Magnier. In particular, Ivell was known to the Irish investors having served as deputy chairman for two years at Next Generation, a racquets club business then owned by a consortium including McManus and Magnier.

Questions were first raised almost two years ago about the undue influence Lewis, McManus and Magnier were allegedly trying to exert over the M&B board. In November 2009 independent directors became so frustrated with alleged threats from these three or their representatives that they ousted four directors.

There followed a two-month interregnum before the voting might of the three investors ensured the independent directors were deposed at an annual meeting. Votes from Lewis and his coterie won out despite the near unanimous support for the independent directors from institutional shareholders.

Four replacement non-executives, led by Lovering, were nominated by Lewis as replacement independent directors. At the time, they insisted they were not Lewis stooges and pledged to restore damaged relations between shareholder factions and the board. Instead, however, all but one of directors have also quit M&B.

The most outspoken institutional shareholder speaking out against Lewis, McManus and Magnier has been Standard Life. Guy Jubb, head of corporate governance at the investment group, told the 2010 meeting he was “dismayed” at Lewis’ behaviour. In recent months, it appears that Standard Life’s dismay has turned to resignation as it has quietly reduced its stake – still at 4.82% according to official filings – to about 0.3%.

A spokesman for M&B would not comment on the record when asked about Ivell’s meeting with the ABI. Some sources privately suggested such meetings were “routine” for new chairmen; others insisted they were “highly unusual”. Corporate governance campaigners are increasingly drawing parallels between M&B’s protracted boardroom dramas and the feuding at London-listed Kazakh mining group ENRC, where several non-executive directors were ousted over corporate governance issues two months ago. It too has three dominant shareholders, controlling just under half of shares between them, whose dominance has generated investor concern. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds