Directors still on hook over pay
SUMMER 2015 gave the impression of being somewhat quieter than most recent years when it comes to turbulent annual shareholder meetings. Uprisings among investors during the run of so- called ‘Shareholder Springs’ grabbed headlines after highlighting boardroom excesses at several prominent companies, even claiming the scalps of some richly-rewarded bosses. There was no widespread repeat this year.
But as the AGM season draws to a close, an analysis by the National Association of Pension Funds highlights that deep- seated corporate governance problems remain a big concern. It found 12 companies within the FTSE 350 where investors expressed discontent with particular governance arrangements for a second consecutive year. In all there were significant rebellions at around a fifth of FTSE 100 and FTSE 250 companies.
As ever, executive pay continues to be a lightning rod for wider governance concerns.
Rather like the old test of assessing the value of executives’ cars parked outside their headquarters, one of the City’s top institutional investors privately admits it seeks out signs of excessive remuneration as they inevitably signal deeper corporate problems, not least a lack of influencing control by non- executive directors.
The message on restraining pay is getting through with more modest salary and bonus hikes.
But some companies are seeking ways of getting around these with long-term incentive plans featuring targets that are all too easy to hit and insufficiently transparent.
High profile companies with successive years of dissent on pay resolutions included drug-maker Astra-Zeneca, energy behemoth BG Group, consumer goods giant Reckitt Benckiser and grocery retailer Ocado.
The biggest shareholder rebellion was at Intertek Group over its remuneration policy which saw a whopping 52.1pc of votes going against the pay resolution. This was largely down to anger at a guaranteed bonus for the incoming chief executive. Other uprisings were seen at supermarket Morrisons, with 42.3pc against the exit payments for its former boss, and a new ‘golden hello’ payment at Centrica triggered a 34.2pc dissent.
While summer 2015 may have been benign for many company directors, the increased focus on corporate governance looks to be here to stay.
It’s good to see shareholders have not forgotten their role in holding accountable those they have elected to the board.
Old Age Problem
TOdAy is Pensions Awareness day, with the industry at pains to change how people feel about saving for their old age. despite all the fuss around pension freedoms it seems we’re still not doing enough and there remains a lack of understanding about the subject among ordinary workers.
According to some estimates, just 7pc of the population are on track for the retirement income they want.
Even those that do save remain sceptical about what they will get back after a lifetime of squirrelling away a chunk of their income.
Apt then that the Equitable Members Action Group is warning members of company pension schemes that time is running out for them to claim any losses from their Equitable Life policies.
The Government is closing its compensation scheme to new claimants on december 31. That leaves just three months to lodge claims for the 130,000 missing members of schemes affected by big losses during one of the biggest City scandals when the insurer came to the brink of collapse in the year 2000.
The message is clear: check your policies now. If you fail to get in touch it is no use complaining later.
Corbynomics
THE worlds of business and politics are uncomfortable bedfellows.
Lord Mandelson’s famous remark that New Labour was ‘intensely relaxed about people getting filthy rich’ is unlikely to be repeated by Jeremy Corbyn.
Business leaders have so far been reticent to attack the newly-elected leader of the Labour Party, despite widespread fears about the stance the party will take during opposition, never mind what might happen should it win unlikely election to government.
A brave few executives have stuck their heads above the parapet and registered mild opinions of what Corbynism could bring, as we report in these pages.
Perhaps those others that are remaining silent failed to learn the lessons of the Scottish referendum.
Then businesses kept quiet, realising almost too late they’d failed to have their voices in favour of the Union properly heard.
We don’t yet know what the precise details of what Corbyn and shadow chancellor John Mcdonnell’s economic policies will be.
But Panmure Gordon’s economist Simon French is spot on when he judges that Corbyn’s stance on Britain’s membership of the European Union is likely to be an important early topic of debate for the party and its critics.
Business can’t afford to give Labour’s new broom an easy ride on Europe or any other economic policy.