Shareholders grill Granada over directors' payments

Gerry Robinson, the Granada chairman, was given a bumpy ride yesterday by shareholders angry with the board's acceptance of controversial payments in return for shorter contracts.

Although the company secured victory in all resolutions, institutional investors said its reputation had been tarnished. Nigel Cope, City Correspondent, reports on a corporate governance row.

Shareholders attacked the board for allowing five directors to receive combined payments of pounds 374,000 in return for having their service contracts in the event of a takeover reduced from three years to two.

Investors queued up to launch stinging criticisms of the payments, with one demanding that they either be returned or donated to charity. Another accused Mr Robinson of "treating shareholders with contempt".

Investors also lambasted the board for awarding themselves large pay increases while pay for Granada workers had increased by just 3 per cent. They were responding to claims by a broadcasting trade union which had issued campaigning leaflets outside the auditorium in central London.

Mr Robinson responded with a charm offensive designed to win the audience over with a persuasive mixture of wit and diplomacy. And there was one apology. "The thing I am very sorry about is that we have ended up with a lot of shareholders that feel strongly about it. I am genuinely sorry about that."

However, he refused to say if he would return the payments or donate them to charity. "That is a personal matter," he said.

He also refused to say the payments were wrong or undeserved. But he did admit that he would not have accepted the payments had he known the fuss they were going to cause.

He launched an attack on Pirc, the corporate governance consultancy which has been strongly critical of the payments. "One of the consequences of this furore is that it drives people to be dishonest. We could have issued a special bonus or increased the salaries and not had a single question. We decided to be honest and we have been pilloried for it. I think it will drive companies to handle it in an underhand way."

However, the company secured victory in the main resolution that had aroused attention. This was the proposal to re-elect John Ashworth, a non-executive director who sits on the remuneration committee which agreed the payments. The result was 302 million votes in favour, 83 million against, with 50.8 million abstentions.

Some City institutions remained unhappy with the affair. "There was clearly a misjudgement. And the question still remains. Why do you need to pay hard cash for something that may never happen?" one said.

Granada also issued a trading statement yesterday. It said the pattern of improvement seen in 1997 had continued in the first quarter of the new financial year.

Media and advertising revenue had grown strongly "and will improve more strongly during 1998" as the benefits of the combined selling in the Granada/Yorkshire- Tyne Tees and Border TV regions became more apparent.