Sir Ken to face shareholder anger as Morrisons struggles

Published on Monday 16 May 2005 01:22

SIR KEN Morrison was preparing for one of the toughest fortnights of his career last night, as two high-profile shareholder bodies called for investors to shout down the 74-year-old at the company’s annual general meeting.

An off-shoot of the National Association of Pension Funds (NAPF) went as far as to call for the supermarket tycoon’s head, saying he had "unfettered powers" to do as he wished with the under-fire group.

And the Association of British Insurers (ABI) joined the fray yesterday, admitting it had "red-topped" Wm Morrison - its term for concluding that a group has failed to measure up to good corporate governance standards.

A spokesman said: "We do not make recommendations as such, but we like to lay the facts bare for shareholders. Concerns remain at the company - it needs to have a better dialogue with shareholders.

Wm Morrison has been one of the UK’s worst corporate governance offenders since the recommendations of the Higgs report became generally accepted practice. Its 18 per cent family holding has kept it insulated from any significant shareholder protest.

The group’s 3 billion acquisition of Safeway has proved a substantial mouthful, and the group has issued four profit warnings since the deal went through. The most recent of these was on Friday, when, despite growing sales, it said margins had suffered.

As a consistently solid performer pre-Safeway, Sir Ken refused to take on even one non-exec and shamelessly held both the chairman and chief executive’s position. However, underperformance has led to concessions to the group’s critics, and Bob Stott was promoted to chief executive in March.

The ABI spokesman said: "Morrison’s has already indicated that it will talk more with shareholders, and we welcome that." Reports over the weekend added that the group could unveil four new non-execs at its 26 May AGM.

Deputy chairman David Jones - who heads up the group’s nominations, remuneration and audit committees - has been charged with finding a successor for Sir Ken, but the 50-year veteran has so far made no indication that he is prepared to step down.

The lack of a coherent succession plan infuriates NAPF off-shoot Research, Recommendations and Electronics Voting. It accepts that it cannot hope to oust Sir Ken without the backing of his family, but believes the call is an appropriate warning shot.