Bank defends new curb on members

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The Independent Online

Financial Correspondent

Bank of Scotland yesterday defended its proposal to limit small shareholders' ability to table resolutions at general meetings, saying it would "stop any single shareholder generating publicity for a particular cause celebre which has no relevance to the bank itself".

The bank faces a small shareholders' resolution to limit directors' pay at its annual meeting on 20 June. A small shareholder, J H Mann, is proposing a motion to limit top directors' pay and benefits.

The bank is holding an extraordinary general meeting the same day as the annual meeting to abolish the right of individual shareholders to put forward their own resolutions at the annual meeting.

"The change will not stop valid concerns being expressed by shareholders," the bank said.

Yesterday the bank responded to press reports linking the two motions, saying: "Bank of Scotland is governed by its own Act of Parliament. From time to time the bank updates its regulations to bring them into line with common practice.

"These proposed changes were on course before a shareholder proposed a resolution for the forthcoming agm."

It adds that the proposal "would merely bring Bank of Scotland into line with Companies Act Practice".

The move comes against a background of increasing small shareholder militancy at annual meetings generally. For instance, Barclays' annual meeting has been targeted for the past two years by representatives of small businesses seeking to raise complaints against the bank.

Such militancy has run up against boards' ability to use proxy votes from institutions which dwarf the shares held by protestors.

Bank of Scotland says that under the new regulation any resolutions proposed at future meetings would need the support of only 100 shareholders, collectively holding shares to the value of pounds 10,000.

"It is believed that this change is in the best interests of the shareholders as a whole," the bank said.

It also hit back at press criticism of a 15 per cent pay risefor the governor and chief executive, Sir Bruce Patullo.

A spokesman said there were two parts to his pay: staff profit share (which is paid at the same percentage rate to all members of staff) increased by 7.2 percentage points (from 6.6 per cent to 13.8 per cent). The remainder was the result of an increase in pensionable salary and bonus.

Sir Bruce urged shareholders to vote against Mr Mann's motion in the lastest annual report, saying it would not work. The chairman added that the small shareholder put forward a similar motion last year but then withdrew it.

The bank already follows the Cadbury committee's guidelines on setting top salaries, it said yesterday.