There was a time when being a director of Independent News & Media was a plum role.
A decade ago, when Sir Anthony O’Reilly was still calling the shots, the media company had assets in Australia, South Africa, New Zealand and the UK and Ireland.
There was a multinational mix on the board, including Kenneth Clarke, a former chancellor of the exchequer in the UK, Baroness Jay, a former BBC journalist and ex leader of the House of Lords, and Brian Mulroney, a former prime minister of Canada.
Local luminaries included Liam Healy, a long-time INM executive who was effectively in retirement, former IMI director general Ivor Kenny, and chairman Brian Hillery, a former Oireachtas member and previous executive director of the European Bank for Reconstruction and Development in London.
The basic fee for INM board members was €50,000 but most directors earned substantially more than that by chairing a committee, holding a position as a director with a subsidiary, or being a member of its rather pompously titled “international advisory board”.
Healy was the highest paid non-exec, earning €311,000, chairman Hillery was paid €155,000, while Baroness Jay received €128,000, and Clarke (who only joined the board midway through the financial year) was paid €65,000.
All has changed at INM in the intervening 10 years. Sir Anthony O'Reilly and his family lost control of the business. Denis O'Brien and Dermot Desmond are now its major shareholders, and the company has sold off its overseas assets to concentrate solely on the island of Ireland.
Being a non-executive director of the company is no longer a plum role. In fact, it’s one that should be avoided at all costs given the chaos currently going on behind the scenes.
On Monday, INM chairman Leslie Buckley, a close business associate of Denis O'Brien, wrote to shareholders to outline the business of the upcoming AGM, which will be held in the Westbury Hotel in Dublin on August 23rd.
His letter included the extraordinary revelation that Robert Pitt, the company's chief executive, "reserves his position" about how he might vote on the seven resolutions that will be put to the meeting.
This was an unprecedented revelation, and one that illustrates clearly the hostility at play among the board of INM. Never before has the CEO of an Irish plc declared that he could vote against a resolution being put by the board to shareholders.
It is understood that Pitt’s decision relates directly to the re-election of Leslie Buckley as chairman. Pitt and Buckley fell out last year over the proposed acquisition of Newstalk, the national radio station controlled by Denis O’Brien.
Buckley pushed for INM to pay a price that was higher than a valuation that the company’s corporate advisers had put on Newstalk.
Pitt refused and made a complaint to independent director Jerome Kennedy. He later made a protected disclosure to the Office of the Director of Corporate Enforcement, which is investigating the matter.
The board also commissioned an independent review, which is believed to be nearing completion. Pitt has reserved his position on how he might vote at the AGM in the absence of the findings of this review.
The other members of the board have indicated their support for all of the resolutions, including the re-election of Buckley, without first having sight of the findings of the report.
This is interesting given that Buckley’s conduct in the Newstalk issue should be central to the report. What if the report finds that Buckley acted improperly? Wouldn’t you want to know the answer to this before supporting his re-election?
One INM director who won't be seeking re-election is Jerome Kennedy, a former managing partner of KPMG, who last week announced that he was stepping down from the board.
Kennedy hasn’t given his reasons for stepping down.
There is also the small matter of INM no longer being in compliance with the UK corporate governance code in respect of the composition of its board. It is supposed to have an equal number of independent and non-independent members of the board, excluding the chairman.
But the recent reclassification of Triona Mullane and Allan Marshall as being non-independent, and Kennedy's departure, means that INM needs to appoint three new independent directors.
In his letter to shareholders on Monday, Buckley said an “independent search consultancy” had been appointed to assist the board in “identifying and recruiting” new non-executive directors.
We wish them well. Given the current bitter divisions at board level, the ODCE’s ongoing investigation, Wednesday’s profit warning and the ongoing challenges facing newspaper publishers, who in their right mind would want to be appointed as a director of INM right now?
