Yell chief's resignation is part of a growing trend

Yell yesterday became the latest to join the list of companies seeing top-level management changes hot on the heels of an unpopular rights issue. Alongside annual results showing sales down by 11.5 per cent, and underlying earnings some 26 per cent lower than last year, the beleaguered directories group announced the resignation of both its veteran chief executive, John Condron, and the finance director, John Davis.

Mr Condron will retire by May next year, while Mr Davis wishes to "pursue a new direction in his career" and will leave the company as soon as a successor is in position, the company said.

Although Yell showed profits of £46.8m compared with last year's losses of £1.03bn, sales slumped from £2.4bn to £2.1bn and underlying earnings from £816m to £620m. The group also forecast that revenues would drop by another 11 per cent in the current quarter.

Bob Wrigley, the group's chairman, was fulsome in praise of both executives yesterday. "The board and I will naturally be very sorry to see both Johns depart," he said, stressing that Mr Condron's contribution to the company "cannot be overestimated", and referring to Mr Davis's "key role" in Yell's transformation.

But Yell has had a choppy few years, hit hard by both online competition and the impact of recession on small and medium-sized businesses' marketing spend. And the two executive departures come just six months after a £660m cash call to shore up £3.8bn-worth of debt, much of it incurred to fund the purchase of Spanish rival TPI in 2006.

Shareholders supported the cash call, and the renegotiations of loan covenants on the remaining £3.1bn of debt. "The management did well to prevent the covenant breach and re-set the debt refinancing, but it didn't solve the fact that there was too much debt for a cyclical business," Dominic Buch, an analyst at Numis, said. "For a long time Yell was a pile of debt that just happened to be publishing the odd Yellow Pages book."

But the alternatives were dire – a bank-orchestrated debt-for-equity swap that would have wiped out the value of equity holdings.

The top-level resignations came as a surprise to the City yesterday – sending the group's shares down by 24 per cent in the morning. They recovered only slightly to close down 22 per cent at 36.76p.

But investor groups applauded yesterday's changes as further evidence of a growing trend, as shareholders force management teams to take responsibility for the decisions that left companies needing a sudden infusion of cash.

Eric Chalker, the director of the UK Shareholders' Association, said: "We welcome the greater director accountability implied by these events, because it helps to balance the 'rewards for failure' which are anathema to private shareholders investing their own money."

Yell is by no means the only firm to see a shake-up of its management team in the aftermath of a rights issue. "It is not surprising that heads are starting to roll after all that investors have been through," one City insider said. "Even if management teams have done a good job trying to get companies out of their difficulties, they are still unpopular."

One of the most recent scalps was Punch Taverns' chief executive, Giles Thorley, who stepped down in March. Although Mr Thorley described the decision as "totally my choice", it nonetheless came in the wake of last June's £350m rights issue, as the group fought off the negative effects of the smoking ban, cheap beer on sale in supermarkets, and then the recession.

In January, Ladbrokes' institutional investors put pressure on the new chairman – the former O2 boss Peter Erskine – to shake up the management team. When Christopher Bell suddenly decided to quit after 20 years at the chain and four as chief executive, the company said he had been considering his position for some time. But City rumour said investor annoyance at Mr Bell's swift move from denying there were any rights issue plans to tapping investors for £275m had tipped the balance.

Last November the chief executive of Reed Elsevier, Ian Smith, quit after just eight months in the top job. The move took shareholders completely by surprise, and not for the first time. The former chief executive of the housebuilder Taylor Woodrow was a surprise choice to lead the company in the first place, given his lack of experience in the media sector. And in July he sprung an £842m equity placing on investors in an attempt to cut the group's £5bn debt pile. The company said that the decision was by mutual agreement. But it also said: "We felt it wasn't the right role for [Mr Smith] in the current economic situation."

Just a few days after the news from Reed Elsevier, the packaging company Rexam announced that its chief executive, Leslie Van de Walle, would step down at the start of the new year. Once again, the move came just after a rights issue. With recession-hit consumers increasingly opting for tap rather than bottled water and standard instead of super-sized drinks cans, profits at the world's biggest drinks can manufacturer were on the slide. The £334m four-for-11 share issue last August was an attempt to avoid Rexam's credit rating being downgraded to junk status, upping the interest payments due on its £2.1bn debts.

Changes to the management team are a good start for investors stung by rights issues. But they do not go far enough, says the UK Shareholder Association's Mr Chalker.

"What we really want to see is the kind of accountability that prevents bad outcomes such as over-borrowing," he said. "While institutional shareholders collectively could make a better contribution than they do, we believe that there is a valuable, untapped resource in the wisdom and judgement of individuals investing for the longer term."

The group is calling for formal committees of private shareholders, to be recognised by all listed companies and engage in continuing dialogue with their boards about how to run the business. That way, shareholders can "play a part in avoiding calamities," Mr Chalker said.