Investment adviser says proposed directors not independent enough

Pressure has mounted on Invesco Perpetual to abandon its planned boardroom coup at Omega Holdings, following an influential investment adviser’s recommendation not to back the fund manager’s nominated new directors.

Pensions Investment Research Consultants (PIRC), which advises institutional investors on corporate governance and social responsibility issues, has issued a note on the Bermuda-based company recommending a vote against all of the six new directors nominated by Invesco at a special general meeting next month.

It says that three of the proposed directors are not independent because they are partners at law firm Cox Hallett Wilkinson, which is retained by Invesco.

And while PIRC says the three remaining proposed directors, including nominated chairman and former Benfield managing director John Coleman, are sufficiently independent, it cannot back them because Invesco has not justified their appointment.

The advice note issued by PIRC, which played a key role in the campaign that led Mark & Spencer’s chairman Sir Stuart Rose to give up his dual role as chief executive of the company last year, said: “As pointed out by Omega, Invesco’s nominees have connections with each other. Three of the directors come from the same law firm, which currently represents Invesco. We do not consider these directors independent in the light of this and very limited disclosure.”

Omega is due to hold the special general meeting in Bermuda on 12 March to vote on the Invesco-backed resolution. Its directors published a strongly worded statement last week recommending a vote against the resolution on the grounds that the proposed composition of the board is “contrary to several important principles of good corporate governance”.

But despite the corporate governance furore over its proposed arrangements, Invesco’s 29.56% shareholding in Omega means that it is expected to get its way when the vote takes place. Invesco refused to comment on the PIRC report.

The PIRC note follows last week’s decision by AM Best to place Omega’s ratings on review due to uncertainties regarding the composition of the company’s board and its future strategy. The Delaware Department of Insurance, Omega’s US regulator, will hold a public hearing on 10 March to consider the proposed changes to the board.