James Moore: Investors should put the boot into Bellway

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The Independent Online

Outlook We're only in the second week of 2013 and already there's the whiff of scandal in the air as a company prepares for its AGM.

It shouldn't come as any great surprise that the company in question is Bellway. The house builder has form here. It was sparking investor rebellions long before last year's apparent surge in activism during the so-called "shareholder spring".

Back in 2009 the company abandoned performance targets when it became clear that management weren't going to meet them, lavishing top bosses with bonuses anyway. That led to the first shareholder vote against a remuneration report for nearly six years.

This year's shenanigans aren't as obviously outrageous, but they again paint a picture of a business that is run for and in the interests of its senior management rather than its shareholders.

John Watson, the chief executive, is due to take up the post of chairman. That in itself is a violation of best practice which holds (quite reasonably) that companies should look outside for an independent chairman who can properly represent the interests of shareholders, oversee the work of executives and stop things from getting too cosy at the top.

The sneaky bit comes in the way Bellway has timed the boardroom changes in relation to its AGM. Mr Watson will take up his new post at the start of February. So shareholders will be asked to re-elect him as chief executive for just three weeks at the AGM on Friday, rather than confirming his appointment as chairman. Or not. It will be nearly a year before they get a chance to vote on his promotion – and the other boardroom changes – by which time he will be able to argue that changing things would be disruptive.

The boardroom shake-up was actually announced way back in August. So there is absolutely no excuse for this situation arising, other than to protect the Mr Watson from the embarrassment of a significant vote against his becoming chairman.

Pirc, the voting adviser, has advised its clients to oppose his re-election as chief executive, because that will effectively serve as a referendum on said promotion. They should heed that call.

This could be the first indication we get as to whether last year's surge in activism was anything more than a flash in the pan.