Shareholders, it is often argued, have the ability to restrain boardroom greed. That's true, up to a point. But, as I discussed two months ago, many institutional investors are reluctant to use their powerful voting muscle as they, too, enjoy rich rewards. And City advisers, such as lawyers and accountants, are also on the gravy train and do not reside in some suburban semi, worrying about the next mortgage payment.
So is it possible to curb excessive pay and perks? Meaningful political intervention is unlikely. The High Pay Commission has offered a few suggestions which are likely to be ignored. And small shareholders, heavily outscored by City institutions, have little power. Perhaps public indignation will eventually have an impact.
Small investors are in a weaker position than I realised, judging by a reader's letter published in The Independent last week. Trevor J Nicholls complained about difficulties he experienced casting his votes.
He holds his shares in a stockbroker nominee account. Although the broker has set up a system for clients to express their votes it is clear that Mr Nicholls finds the whole exercise confusing and exhausting. He wrote: "I simply do not have the time or inclination to obtain all the information necessary to exercise my shareholder's rights and I doubt many others would either."
Apparently Mr Nicholls is an online investor. And nominee accounts, however reliable the stockbroker may be, divorce the shareholder from the company. In most cases the shareholder does not receive yearly reports or information about a company's activities, including profit performances and various forms of corporate activity. It is not unusual for dividends to be lumped together and dispatched once or twice a year.
But there is a remedy. Go offline. In other words insist on traditional shareholder rights such as receiving through the post printed reports – some companies no longer offer hard copies of interim statements but yearly reports and accounts are obligatory. Dividend payments can arrive via cheques or electronic transfer. Besides offering details of the company's achievements (or lack of them), the yearly report should provide the date and place of the annual meeting as well as voting forms covering each proposed resolution. Most companies even supply a stamped addressed envelope. In addition investors obtain a share certificate to underline a shareholding.
It's what's known as old-fashioned investing. The City does not like it because it is rather cumbersome and expensive. And companies will strive to get investors online because there are obvious cost advantages in communicating through the internet.
Mr Nicholls is an experienced investor. Dealing with the post from his investments could be time consuming but at least it would be simple to register his votes.
I have fought against the trend to coerce investors to go online. At least the frantic campaign to abolish paper share certificates has been abandoned. I think the incessant pressure to force adoption of the internet and give up printed communications should also come to an end. Very often inertia methods are used. It is true that online share trading is cheaper but in all other respects the shareholder is the poorer relation. Surely, investors should not be shanghaied into giving up traditional investing if they don't want to.
Unfortunately, whether on or offline, small shareholders carry little voting weight. Still, it is good to release emotions, no matter how ineffective, when coming across a serious example of boardroom greed. Returns for success, so long as the system is not too favourable to executives, are eminently tolerable but rewards for failure are not.
Many of the people in the pay storm are managers. They have worked their way through the ranks to achieve top jobs. Some seem to think that extravagant pay and perks are a justifiable reward. A distinction should be made with entrepreneurs who have the courage to start businesses. Fred Crook of The Courier Company of Milton Keynes wrote, in the same issue as Mr Nicholls, that he would object as he starts to enjoy the fruits of his labours to "a highly paid quango" monitoring his pay.
It seems to me that the rewards now bestowed, not only in the City and industry but on many other unrelated occupations, have become out of touch with reality.
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