Green's last stand

19 October 2003 By Hugo Dixon Follow @hugodixon

It’s hard to see Michael Green hanging on as chairman. The issue is whether the entire board dies in the trenches with him. Institutional shareholders have rarely demonstrated such muscle in dealing with a large UK company. They have plotted well.

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Carlton Communications board met on Sunday afternoon to consider a demand from a group of shareholders that its chairman, Michael Green, should stand down as chairman. It later issued a statement rejecting the demands.

The shareholders – led by Fidelity and including UBS, Standard Life, Isis, Morley, Legal & General, Schroders and Deutsche Bank – have set a deadline of noon on Tuesday October 21 for Carlton to comply with their demands. In a letter sent on Friday, they said that otherwise they would consider all other measures open to us to ensure compliance. Collectively, the shareholders speak for around 36% of Carlton's equity.

The shareholders want Carlton – which is in the process of merging with Granada to form ITV – to appoint an independent nonexecutive chairman from outside the enlarged group. Some have suggested John Nelson, a former investment banker who advised Granada on several highprofile takeovers during the 1990s including the acquisitions of Forte and LWT.

Fidelity originally wanted Charles Allen, the Granada chairman who is due to become chief executive of the merged ITV, to stand down. But it backed down after Sir Brian Pitman and Sir George Russell, respectively the senior independent directors of Carlton and Granada, rejected it.

John McGrath, the former chief executive of Diageo and chairman of Boots who is a Carlton director, gave strong backing to Green. We decided Green was the right man to chair ITV and we haven't changed our minds, he told the Sunday Telegraph.

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