Babcock & Brown seeks independent directors

While last month's shake-up went some way to tackling concerns about the imbalance, B&B remains under pressure to further strengthen its board with outsiders as it seeks to reverse falling earnings and restore its battered share price.

New chairman Elizabeth Nosworthy, who stepped up from the role of deputy to replace B&B's founder, Jim Babcock, has underlined to investors that the company will soon have just one employee - new managing director Michael Larkin - on the board, compared with seven non-executives.

That is in contrast to a balance of four-to-five members in favour of non-executives before the August 21 changes. Under the changes, Mr Larkin replaced long-standing boss Phil Green, after a 30% fall in half-year profits and a 90% decline in the group's market value over the past year.

Mr Green and Mr Babcock will remain on the board as non-executive directors, but will not be considered as independents.

Under Australian Securities Exchange corporate guidelines, the most recent revamp will leave the B&B line-up with five non-executive directors and three with continuing or immediate past executive ties.

To give the board a clear two-to-one majority in favour of independents, it is believed B&B may take on another two directors to add to the experience of just-appointed deputy chairman Pat Handley.

Mr Handley is a former chief finance officer of Westpac and is chairman of clothing company Pacific Brands.

The B&B board has enough financial headroom to accommodate new appointees after shareholders agreed to a $1 million increase in board fees - to $2.5 million from January 1 - at the annual meeting.

The standard payment for a director is now $215,000 a year. But Ms Nosworthy and Mr Handley will earn in excess of $300,000 a year because of their senior roles.

The other directors are entitled to extra annual fees of $15,000 to $44,000 if they become a member of, or head, one of the board committees.

The search for the new directors comes as B&B yesterday confirmed it had found a chief financial officer to replace Mr Larkin, after he was given the task of heading a radical overhaul of the group's business.

Mr Larkin has appointed John Fanning to the role. Mr Fanning will move from a senior executive position in the group's soon to be wound down deal-making corporate and structured finance division.

Mr Fanning, who has been with B&B for three years and started his new job immediately, was previously a partner with the large accounting company Ernst & Young.

He advised various listed Australian companies on restructuring, demergers, acquisitions and disposals.

B&B's shares rose 8 yesterday to $2.43.