Charles Allen, the Granada chairman, is coming under mounting pressure to renounce his rolling two-year contract, which entitles him to a £2 million payout if and when he decides to leave the company.
A report in the Sunday Times claims that Schroders and Morley, which own almost 10% of Granada, want to scrap a clause in existing agreements that would allow Allen to walk out and collect twice his annual salary of £963,000.
Shareholders voiced their disapproval of the contract deal at last week’s AGM where one in four voted against the pay packages of senior management. Investors have railed against two year contracts as they can lead to payment for failure and there is particular concern in this instance because Allen can trigger the payout himself.
Granada has intimated that it might abandon the deal ahead of the proposed merger with Carlton Communications. Leading managers at Carlton do not have the same privileges as Allen and a new renumeration committee is likely to call for a standardisation of practices.
The $2.6 billion merger has been referred to the Competition Commission, which is expected to complete its investigation in June.
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