How you can force companies to behave themselves

Buying even a single share in a firm gives you the right to question its practices

Angry at the size of energy company profits while millions are living in fuel poverty? Feel betrayed by banks paying bumper bonuses to senior staff?

These issues are encouraging more and more normal folk to be come shareholder activists. To get shareholders' rights in a firm, you only need to hold one share, and then you can attend a company's annual general meeting (AGM) and ask questions directly of the senior management.

Last year, the campaigning MP Tom Watson did just that at the AGM of News Corporation, the owner of The Sun newspaper. In a blaze of publicity he flew to Los Angeles to question the firm's chairman, Rupert Murdoch, about the phone-hacking scandal.

His aim was to force the firm to tell shareholders about the scandal.

"You haven't told any of your investors what is to come," he said to Mr Murdoch at the meeting.

Another high-profile figure who has used shareholder activism to publicise what he felt was corporate wrongdoing is celebrity chef Hugh Fearnley-Whittingstall. In 2008 he went to the Tesco AGM in Solihull to put a resolution that would force the supermarket chain to improve its standards on chicken-rearing.

It was also hit by shareholder activism the following year when trade union Unite got enough support from investors to file a resolution calling for an end to the exploitation and discrimination of workers that supplied meat to Tesco.

The union was supported by Pensions Investment Research Consultants (PIRC), which advises institutional investors on corporate governance and social responsibility.

PIRC also helped challenge in 2009 the power of Stuart Rose, when he became executive chair as well as chief executive of Marks & Spencer.

"Ultimately the public are the owners of UK PLC through their pension funds and other savings," said Tom Powdrill of PIRC. "If they are concerned about corporate behaviour, shareholder activism is a good way to encourage companies to toe the line."

It doesn't matter what issues concern you about a company; if you are a shareholder you have the right to ask questions of the bosses. However, if you want to raise a resolution you'll need to own 5 per cent of the issued share capital (which is beyond most of us) or be able to get 100 shareholders together (with a holding of at least £100) to support your resolution.

Andy Parsons, head of investment research at The Share Centre said: "The subject of corporate governance has never been so relevant and prominent, especially around the most vexing of issues, remuneration. Private investors continually hear about vast boardroom remuneration packages; trying to comprehend the vast discrepancies between the numbers mentioned and their own personal financial circumstances.

"In addition, it's always alarming to hear of bonus packages when a business may have clearly failed to deliver shareholder returns. Is it right that individuals can be rewarded for failure?"

While the banks bear the brunt of the current focus on bonuses, there are plenty of other firms facing similar examination. And the fact is if you become a shareholder, you are an owner of that firm and can have a say in how it conducts itself.

Even if you're not a shareholder, you are still likely to have stake in many UK firms through any pension scheme you belong to. Most pension funds invest in blue chips, so your future may depend on how well these firms run their business now.

"Shareholder activism is relevant to anyone with pension savings," said Catherine Howarth, chief executive officer of FairPensions, which campaigns for responsible investment. "As savers we have a clear interest in how companies operate – our incomes in retirement depend on it.

Ms Howarth believes shareholder activism is the smartest way to get an issue of concern on the radar of top corporate executives. Her organisation has just held a training sessions for potential shareholder activists. Attendees at the London session last Saturday, were taught the skills needed to hold company directors to account at their annual meetings.

"Shareholder activists are the ones who keep the pressure on and don't let companies get away with short cuts," said Ms Howarth. "Their persistence is changing companies in the UK and around the world."

She said that the big institutional investors should take a lead from the growing army of individual activists. "Our shareholder activists are setting an example to the investor community," Ms Howarth said.

FairPensions will be holding another training event at the end of March. For information go to www.fairpensions.org.uk/agmtraining.

The big banks will be holding their AGMs from April.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Tax Manager / Accountant

    £35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

    Ashdown Group: Contracts Executive - City of London

    £35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

    Recruitment Genius: Call Centre Debt Collector - Multiple Roles

    £21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

    Day In a Page

    Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

    Uganda's giants are flourishing once again

    After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
    The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

    After 350 years, the riddle of Britain's exploding fleet is finally solved

    Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
    Airbus has patented a jet that could fly from London to New York in one hour

    Airbus has patented a jet that could fly from London to New York in one hour

    The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
    Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

    Tate Sensorium

    New exhibition at Tate Britain invites art lovers to taste, smell and hear art
    10 best sun creams for kids

    10 best sun creams for kids

    Protect delicate and sensitive skin with products specially formulated for little ones
    Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

    Nice guy Finn is making up for lost time – and quickly

    He was man-of-the-match in the third Test following his recall to the England side
    Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

    Remember Ashton Agar?

    The No 11 that nearly toppled England
    Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

    US betrayal of old ally brings limited reward

    Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
    VIPs gather for opening of second Suez Canal - but doubts linger over security

    'A gift from Egypt to the rest of the world'

    VIPs gather for opening of second Suez Canal - but is it really needed?
    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
    The male menopause and intimations of mortality

    Aches, pains and an inkling of mortality

    So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
    Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

    'How can I possibly be on the list with these writers I have idolised?'

    Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
    Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

    Bettany Hughes interview

    The historian on how Socrates would have solved Greece's problems
    Art of the state: Pyongyang propaganda posters to be exhibited in China

    Art of the state

    Pyongyang propaganda posters to be exhibited in China
    Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

    Vegetarian food gets a makeover

    Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks