Babcock seeks outsiders as it alters board mix

While last month's top level shake-up went some way to addressing shareholder concerns about the imbalance of executive directors, B&B remains under pressure to strengthen its board with outsiders as it seeks to turn around its falling earnings and battered share price.

B&B is likely to end up with a board of 10 members, of whom seven will have had no previous day-to-day employment ties with the group.

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 and seven non-executives.

Before the August 21 changes the balance was four-to-five in favour of non-executives.

Those changes involved long-standing boss Phil Green being replaced by Mr Larkin and Mr Babcock stepping aside - after a 30 per cent fall in half-year profits and a 90 per cent decline in the group's sharemarket value over the past 12 months.

Both Mr Green and Mr Babcock, though, remain on the board and while they are in the process of switching from executive roles to non-executive ones, they will not be considered as independents given their previous jobs as B&B's top two full-time managers.

Under the corporate governance guidelines set out by the Australian Securities Exchange, the most recent revamp will leave the new B&B line-up with five non-executives and three with executive ties, continuing or in the immediate past.

In order to give the board a clear two-to-one majority in favour of independents, it is understood the company is looking to take on another two directors to add to the experience of the newly appointed deputy chairman Pat Handley.

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

The B&B board has enough financial headroom to accommodate new appointees after shareholders agreed to an extra $1 million in board fees at its annual meeting just over three months ago.

The limit of $1.5 million will be increased to $2.5 million from January 1, with the standard payment for a directorship set at $215,000 a year.

Ms Nosworthy and Mr Handley, though, will earn more than $300,000 a year given their more senior roles, and the other directors are entitled to extra annual fees of between $15,000 and $44,000 if they become a member of or head one of the board committees.

Yesterday B&B confirmed it had found a chief financial officer to replace Mr Larkin, who has been given the task of carrying out a radical overhaul of the group's business.

John Fanning was appointed to the role yesterday and started immediately. He was previously a senior executive within the group's corporate and structured finance division, a deal-making division that is to be wound down soon.

Mr Fanning, once a partner with Ernst & Young, has been with B&B for three years.

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