Northern’s shares fell by 7p yesterday to close at pounds 7.84.Northern Electric has already conceded that a bid may proceed once the regulator, Offer, announces plans for new controls on electricity distribution prices. There is also a view, however, that Northern will be unhappy to retain Warburg under its new ownership but will fight to keep it as adviser for long enough to make life difficult for Trafalgar.Today’s meeting has been forced on Northern by rebel shareholders led by Guy Wyser-Pratte, a US investor who has the support of groups holding 10 per cent of the stock. A spokesman for Northern, which has urged shareholders to reject proposals to allow a bid, said it was confident of victory.The Prudential, which has about 8 per cent of the shares, is believed to support the board. Northern’s board blocked a renewed offer at pounds 9.50 per share after an pounds 11 bid lapsed in March.Some industry observers feel that SBC, as the aggressor, should stand down voluntarily. One industry source said SBC was grappling with the issue of whether sensitive information could be kept confidential if both advisory teams continued in their roles. He said SBC was “trying to take a view as to whether ring fencing is practical or not”.
The issue will come under the spotlight after Northern Electric’s extraordinary general meeting in Newcastle today, at which shareholders will vote on whether Trafalgar should be allowed to proceed with a bid. Swiss Bank Corporation may step down as adviser to Trafalgar House in its expected renewed bid for Northern Electric, in turn being advised by SG Warburg.

The Takeover Panel is understood to be talking to all parties concerned, but no decision has yet been taken. When Sir David called shareholders to vote in favour of the resolution, a sea of hands eclipsed the view of those standing at the back.When he called a second time for the vote of those against the sale, only three tentative hands were raised, belatedly joined by a fourth.. The meeting was told that such payment was necessary to cover the cost of renaming MAM’s overseas business and for the replacement of facilitates currently shared with Warburg’s.Nobody mentioned the axed merger plans with Morgan Stanley. He asked if members of the board did not think they could put the bank back on its feet themselves?Sir David replied that only radical and wrenching surgery would bring the banking division back into profit. Sir David repeated several times that the board unanimously recommended the sale.A half-hearted question was put about a special payment to Mercury Asset Management of pounds 35m as a contribution towards covering its costs from the separation of the business from the group. He said there was a great deal to be proud of in Warburg’s but concluded that had the bank not entered into ill-conceived expansion and incurred unjustified costs, there would have been no pre- tax loss of pounds 16.9m and no need for the sale to SBC in the first place.Mr Harley wanted to know how the board could be happy with the sale of the banking operation for a premium of less than that paid for some other parts of the group.

A sea of grey suits fuelled an atmosphere more akin to a wake than a knockdown sale. The entire board sat in tiered rows behind their chairman and shifted uncomfortably when questions began.
A former senior director of Warburg’s, Mr Peter Harley, posed the only potentially awkward question. Chairman Sir David Scholey spoke to the gathering in a manner suggesting the procedure was purely a matter of course. Shareholders gathered yesterday to approve the purchase of S G Warburg, Britain’s premier investment bank, by Swiss Bank Corporation for pounds 860m. It was satisfied the systems used to reward directors were “adequate and not in need of revision”..

It will be paid in shares and be worth up to 125 per cent of his pounds 475,000 basic salary. This could take his total package to over pounds 1m.Results of Wednesday’s voting, released by the company yesterday, show 16.9 per cent of shareholders voting supported PIRC, with more than 354 million votes cast in its favour.Prudential, British Gas’s largest shareholder with a 3.6 per cent stake, justified its support for the company. We have stripped out other people’s bonuses.”Although Mr Brown received no bonus in 1994, he will get one this year under the company’s long-term incentive scheme. PIRC has surveyed the accounts of all the 64 FT-SE 100 companies that have reported so far this year, and claim their study places Mr Brown as the 18th best-paid director, well above the half way point.British Gas also made the claim in a letter sent to the City institutions that came to the company’s rescue on Wednesday by voting against the PIRC resolution demanding a rethink on directors pay.The company wrote: “His annual cash compensation for 1994 was less than that for half of the chief executives of FT-SE 100 companies.”Anne Simpson of PIRC said: “If you compare Cedric Brown’s basic salary with the total packages, including bonuses, given to other directors then, yes, he is around the median What we are looking at is like for like.