David Prosser: Gartmore sets a shocking example

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The Independent Online

Outlook One of the reasons bank bosses ran the financial system into the ground over the decade to 2007 was their masters did not stop them from doing so. Institutional investors, the owners of the banks, failed to wield their influence in the boardroom, standing idly by as executives made a string of bad decisions. They also, of course,voted in favour of the remuneration packages that saw bankers rewarded despite the damage.

Sir David Walker, the former banking executive, made exactly this point in a hard-hitting report published in November 2009, calling for shareholders in our leading banks to be much tougher on executives – to get to grips with some pretty basic principles of corporate governance, in other words.

There is just one catch. It does not make sense for those in charge at our big institutional investors to make a fuss at the companies in which they hold stakes if they are themselves guilty of the sort of thing they are supposed to be stamping out.

That brings us to Jeff Meyer, the outgoing chief executive of Gartmore, who, we reveal today, is walking away from the fund manager with a pay-off of £5m.

Had Mr Meyer's stewardship of Gartmore been acclaimed a universal success, this pay-off would still be a poor show since it contravenes corporate governance guidelines on golden goodbyes.

It is, however, fair to say that the Gartmore boss has his detractors – not least amongst those who coughed up 220p for each of the fund manager's shares when it floated a year ago, only to see the company recommend an offer from Henderson worth around 92p a share yesterday.

There are a number of reasons why Gartmore has performed so poorly since its flotation, a good number of which cannot be laid directly at the door of Meyer. Still, when investors have fared so badly, it cannot be reasonable or appropriate for the chief executive to do so well, whatever his contract has to say on the matter.

As for the banking sector, those who want to see higher standards of governance can only hope that the attitude of institutional investors turns out to be "Do as we say, not as we do".