Hewitt hails shareholder power

THE Government has for the first time stepped into the Carlton/Granada row, coming close to applauding the rebel shareholders for flexing their muscles.

Trade and Industry Secretary Patricia Hewitt cited the recent revolt at the TV company as a good example of shareholder activism.

'I don't offer any judgment on the rights or wrongs of this. That's a matter for the board and their investors,' she told an investor seminar today. 'But I will stand up for the rights of shareholders - as the ultimate owners of a company - to take this sort of action.'

In a fierce City scrap, institutional shareholders led by Fidelity International forced Carlton and Granada to scrap plans for Carlton's Michael Green to chair the combined group.

Hewitt made no comment on the BSkyB row, but paid tribute to new boardroom rules laid out in the Higgs Report. According to these, Lord St John has been on the BSkyB board too long to be considered independent.

At the seminar, organised by Hermes, Hewitt accused the City of allowing bad management to carry on. 'Too many fund managers, when faced with underperformance, continue to support inadequate management. Others simply pull the plug and switch investments.'

Voting levels at annual general meetings of just 50% were 'simply unacceptable', she said. While ruling out compulsory voting, she urged institutions to address the problem and disclose how they vote.

'Government should not force an increase in activism to occur. But, as with executive pay, we can play a role in creating the right framework for such activism to take place,' she said.