Mitchells & Butlers, the embattled pub restaurant group, is to become the only company in the FTSE 350 – possibly the entire stock market – without any of the independent directors required under corporate governance guidelines.
M&B has announced that interim chief executive Jeremy Blood is to leave almost immediately, requiring caretaker chairman Bob Ivell to assume the executive helm temporarily. Ivell, who is chairman of privately owned fitness club group David Lloyd Leisure, has also assumed the role of M&B chairman permanently.
He becomes the latest in a series of M&B chairmen to insist he can reconcile differences among shareholders and attract new talent to the board. Like previous chairmen, he is also attempting to declare a new beginning while not hesitating to criticise the failing of predecessors.
"My intention is to strengthen the board with the right people who add value. There is no point having people on the board who just don't add value – and I think maybe in the past we've had that … I think we will get good people because good people will see the opportunity that exists. We're turning a page, we're moving forward," said Ivell.
Ivell and Blood had been the only independent directors left on the depleted five-man board of M&B after a string of departures and a failure to recruit new blood. Institutional investors have been pressing the group behind brands such as O'Neill's, Browns, Harvester and Toby Carvery to appoint independent directors for more than 18 months.
Many City fund managers remain concerned about the influence of M&B's largest shareholders: currency trader Joe Lewis, who holds 23%, and a trio of Irish co-investors – JP McManus, John Magnier and Derrick Smith – that controls 24% of shares.
Lewis currently has two representatives on the board and last month approached M&B indicating he was considering an opportunistic, nil-premium takeover, which was rejected.
The latest boardroom reshuffle – which also sees company secretary Doug Evans promoted to a full board director – comes after two years of tense relations with M&B's two largest shareholders. In November 2009 disagreements with the then board dramatically burst into the open as M&B sacked two Lewis representatives from the board and two others. Allegations by the remaining independent directors that a cabal of large shareholders was plotting to control the company in a clandestine manner were denied; and a complaint that they had breached rules was rejected by the Takeover Panel. However, the accusations have since left M&B's shareholder base deeply divided.
Several institutional investors have written to M&B urging the board to recruit independent directors as a matter of urgency. The UK corporate governance code states that "at least half the board, excluding the chairman, should comprise of non-executive directors determined by the board to be independent".
Alan Brett, of shareholder advisory group Manifest, said: "Independent shareholders will be extremely concerned at the absence of any independent non-executive directors on the board. We would hope the board announces some new appointments before Christmas."
Unless M&B delays its annual shareholder meeting it must send shareholders a meeting notice shortly before Christmas, which must include the names of new directors whom they will be asked to formally re-elect to the board by ballot.
Ivell, a pub industry veteran who ran Beefeater in the 1980s and the business that is now called Spirit Group in the 1990s, said he would not be rushed into making non-executive appointments, stressing his first task was to find a permanent chief executive.
"I think this is a really good business; I think it could be a great business. But it has been in a holding pattern for a period of time. There are some obvious things that need to be done. This business is totally in my sweet spot – it's what I've done all my career."