James Moore: A crass label for a less than idealistic movement

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The Independent Online

Phew. That was quite an AGM season, wasn't it? Remuneration reports voted down, chief executives of FTSE 100 companies quitting soon after, noisy protests outside meetings... No wonder people dubbed it the "shareholder spring".

But wait just a second. That grandiose title – and I admit to falling into the trap of using it – was always a little crass. The Arab Spring was named after protesters who stood in front of bullets in an attempt to get democracy. The shareholder spring? That involved a few City institutions exercising votes that they'd had for years but were too complacent to use. Its aims weren't so much idealistic as they were cynical.

Over the next few weeks those institutions will be meeting members of remuneration committees. "Cool it," they'll urge, although whether they will be heard is harder to say.

Just look at the response to even Aviva's frankly rather surreal attempt to award its (now) former chief executive Andrew Moss a pay rise when the shares were falling off a cliff. The chairman of its remuneration committee claimed the rise was "in shareholders' interests".

You'll hear the same said about even the craziest packages. Packages which are, in reality, economically illiterate. How can showering executives with huge bonuses for treading water – if that – be considered otherwise?

A very senior figure at one of the more progressive fund managers told me that one of the problems facing non-executive directors is that they receive a different opinion on what to do about the current situation from each shareholder they speak to. And that commentators offer criticism but not solutions. So here is one. Pay less. Companies should put some of the money they give to their executives back where it belongs: in the pockets of shareholders who provide the capital for them to run their businesses. That's cost-cutting no one could object to.

Second, performance targets should be reformed to make them tougher, and they should be published. Currently bonuses are paid seemingly as of right for little better than mediocrity. In a sane world, they should be conspicuous not by their size but by their rarity. Finally, it should be taken as read that when shareholders suffer, so should bosses.

This need not be cloud cuckoo land. Making it happen should actually be seen as part of the fiduciary duty of non-executive directors. And of the fund managers who hold their voting power by dint of the fact that they steward the savings of millions of small investors who lose a small part of their investments each time executive pay is increased.

Sadly, too many fund managers are part of the problem rather than the solution. Until that changes we should do away with the excitable talk of a "shareholder spring".