A group of BAE Systems shareholders has demanded the resignation of chairman Dick Olver, saying sweeping changes are needed at the UK defense group following the collapse of the EADS merger two weeks ago.
In a letter to the board, which has been seen by the Financial Times, the shareholders called for both Mr. Olver and Sir Peter Mason, BAE's senior independent director, to stand down due to the "significant damage" caused by the botched €34 billion deal to create a pan-European aerospace group.
Invesco Perpetual, which publicly opposed the planned EADS transaction, has been joined by two other big shareholders in criticizing BAE's "misguided" strategy. The three investors, which account for about 18 percent of the group, believe BAE has been too reliant for growth on mergers and acquisitions over the past eight years and that this has destroyed value.
They argue that refreshed board leadership is needed both to improve governance and to set BAE on a different course. Owing to their long tenure on the board, Mr. Olver and Mr. Mason have lost credibility with investors, the letter states.
The shareholders call for a new chairman to institute an urgent review of the group to refocus on its core businesses. They say the search should begin immediately.
The letter will increase the pressure on BAE's board following the collapse of the EADS deal. Mr. Olver and Ian King, the group's chief executive, have argued that BAE does not need to change its strategy.
The intervention comes at a time of mounting investor impatience. Another top 10 investor in BAE said: "I cannot see either man lasting up until next year's annual meeting. This is a company that needs a much clearer strategic direction, and it is not clear to me that these men can provide it."
BAE said on Monday night: "We are in regular dialogue with our major investors and we listen carefully to the views of all our shareholders. The board of BAE Systems remain fully supportive of its directors."