The board of Londis gave ground yesterday as directors faced shareholders' anger at the annual general meeting of the convenience store chain, which is owned by just under 2,000 shopkeepers.

The proceedings, which lasted more than three hours, were dominated by questions about a controversial share-option scheme that entitles four executives to 51 per cent of the proceeds if Londis is taken over, and criticism of the non-executive directors for not alerting shareholders to the impact of the arrangement.

Earlier this month, a recommended £40 million (€57 million) offer for Londis from Musgrave, the Irish group that owns Budgens, sparked the row about the scheme, as it became apparent to shareholders that, while they would receive about £10,000 each, the four executives would share £21 million.

That offer has now been overtaken by a sale process to be managed by KPMG.

Mr Peter Williams, Londis's non-executive chairman, said that KPMG would also advise the board on whether the cadre of independent directors needed to be strengthened, and would ensure that shareholders had some input into the discussions about changing the share-option scheme.

There is currently a vacancy for a non-executive, and there are some hints that the appointment could go to one of the 80-90 shareholders present at the meeting.

"I won't say the non-executive issue is dead in the water," Mr Williams said. "We have had a lot of shareholder input and we have taken on board their points."

Mr Alan Heasman, one of the four independent directors, had to stand down at the meeting.

Even after he had sold his business, Mr Heasman had continued to serve on the board on the basis of the authority - which was withdrawn yesterday - to act as the representative of the shareholder to whom he had sold it.

Mr Stephen Barrett, of KPMG's corporate finance division, said he wanted to facilitate a stream of communication from the shareholder action group to KPMG directly.

Both Mr Williams and Mr Graham White, Londis chief executive, told the shareholders at the meeting that they would stand down if a second recommended proposal was rejected by shareholders.

Representatives of the shareholders' action group welcomed the concessions but were clear that there should still be board changes.

"We are 100 per cent dedicated to the removal of the non-executives," according to Mr Adrian Costain, the action group's candidate to be Londis chairman.

Although all four resolutions at the annual general meeting were defeated on a show of hands, they were passed on a poll.

Even so, 24 per cent voted against the resolution on non-executives' remuneration.