BSkyB fears row over ?4m payoff

BSkyB is braced for further shareholder upset over executive pay after the departure of its finance director last week.

The National Association of Pension Funds, whose members control a quarter of the stock market, has written to the satellite television company asking for further details about the potential payoff for Martin Stewart, who announced his decision to quit last week.

Mr Stewart, 40, stands to gain at least £4m when he leaves the company later this year based on his remaining share award schemes and the payment of a year's £400,000 annual salary.

Rupert Murdoch, chairman of the company, faced down a shareholder rebellion last year, over the appointment of his youngest son, James, as chief executive of Sky.

Following a combative performance during which Mr Murdoch told shareholders who did not like the company's corporate governance to sell their shares, the 72-year-old patriarch did offer an olive branch to irate investors when he ordered an internal review of the group's corporate governance and remuneration policies.

The company board, which is due to hold a meeting today, is likely to hear a preliminary review of those reports, headed by Lord Wilson and Jac Nasser, although they are unlikely to be published for some time.

Mr Stewart, who lost out in his attempt to assume the company's top executive slot three months ago, has agreed to stay on until August 4 unless a replacement is found earlier. The eight-year company veteran will then be subject to a 12-month notice period.

Although Sky, which is 35% owned by Rupert Murdoch's News Corporation, will not comment on the terms of any payoff, he is set to receive the market rate for the shares in the incentive scheme under the company's relatively generous executive pay deal.

Sky acknowledged that it had received the enquiry from the NAPF yesterday and said: "Anything we are required to disclose, we will disclose."

The terms of Mr Stewart's departure are not likely to be released until the annual report is published later this year.

The NAPF declined to comment yesterday. Last year it recommended that members back the election of James Murdoch to the board after raising concerns about the company's corporate governance.

Shareholders grew angry at the size of the payoff to Tony Ball, the chief executive who stood down last year. Although not described as a severance package, Mr Ball walked away with £10.7m after agreeing not to work for a competitor for two years.

He is now understood to be looking at a number of boardroom and private equity ventures as well as tending his Spanish olive grove near Barcelona.

Mr Stewart is on a shorter contract. When he announced his departure last week, Mr Stewart said he was leaving to "pursue new opportunites". Unlikely to be allowed to work for a rival, Mr Stewart is also expected to look for private equity deals.

Along with Mr Ball, Mr Stewart presided over the company's set-top box giveaway which helped it reach its target of seven million customers. He is due to outline the company's financial results tomorrow, James Murdoch's first results presentation since taking the helm.

The company is expected to announce the resumption of dividend payments after a five-year gap.