Row over board fees at mm02

MOBILE phone operator mm02 faces a shareholder revolt over consultancy fees paid to Andrew Sukawaty, its 'senior independent director'.

Leading shareholders say the payment compromises his independence and undermines his powerful role in the boardroom. They are threatening to vote against his re-election at the company's annual meeting next month.

Sukawaty joined the mm02 board in the run-up to last year's demerger from telecoms group BT. But in the two months before his appointment, he was paid £17,648 for consultancy services to mm02, formerly BT Cellnet, according to the group's latest annual report.

One major investor said: 'He can't be independent if he has received consultancy fees. You'd worry about him being the senior independent nonexecutive when clearly he isn't. We won't be voting for his re-election.'

The annual report also shows that chief executive Peter Erskine was paid a total of £947,000, up from £721,000 the previous year. This included a £250,000 bonus, of which £25,000 related to the 'successful completion of the demerger'. It was awarded 'at the discretion' of the board's remuneration committee, which is chaired by Sukawaty.

Shares in mm02 have more than halved in value since the company was floated seven months ago.

David Varney, its chairman, also received a demerger bonus of £150,000 from BT, taking his earnings last year to £568,000.

The looming row over Sukawaty's position follows last week's furore over the £1.5 million bonus paid to Sir Christopher Gent, boss of Vodafone, which recently reported the biggest loss in corporate history. It also comes as the Government is looking into the role of senior independent directors in the wake of the Enron scandal.

Senior independent directors play a key role in monitoring standards of boardroom behaviour. But a report published last week by the Co-operative Insurance Society, one of the biggest institutional investors, found that almost a quarter of directors named as 'senior independent' with FTSE 100 companies were not independent at all.

An mm02 spokesman insisted Sukawaty was independent because he was a consultant to, and paid by, BT before the demerger.

Bonuses paid to British Energy directors more than trebled last year, though the privatised nuclear power group recorded a £493 million loss. Chairman Robin Jeffrey was paid a £130,000 bonus compared with £55,000 the previous year. His total pay rose to £478,000, up 37%.