James Moore: It’s time for shareholders to hold companies to account once again
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Tuesday 04 March 2014
March heralds the beginning of annual meeting season in earnest and ought to provide some indication as to whether this year’s will resemble the limp affair of 2013 or something more meaningful, as in 2012. That was when institutional investors remembered their fiduciary duties to the people who pay their fees (us in other words) by occasionally using their votes.
The biggest fuss heading into this year’s season has yet again been provided by the banks, but is this really justified? Much has been written, including in this column, about the sector’s addiction to unjustified and unjustifiable bonus payments, particularly given that the fact that profits are privatised whereas losses are socialised.
But banking is far from being the only sector in need of reform. And it is at least having to abide by new regulations designed to ensure that money can be clawed back from undeserving executives whose activities leave their employers, and taxpayers, in a sticky situation.
In fact the travails of the banking industry have arguably enabled City money managers to take their foot off the gas elsewhere, where pretty much anything still goes.
Bonuses are still showered upon the occupants of boardrooms with scant apparent regard for whether they are merited. Then there are the so-called long-term incentive schemes – supposedly aimed at ensuring bosses think beyond the next quarterly trading update – that are anything but. They typically dole out free shares worth millions of pounds after only three years, even though the decisions of the recipients can impact on the businesses they run for many years beyond that period.
Things might change a bit for the better thanks to Fidelity, the fund manager which wants executives to hold the freebies for at least five years before they cash in.
It plans to use its votes to ram the point home, and with shareholders having the power to throw out companies’ remuneration policies, that actually matters.
However, while having Fidelity voting against them will be embarrassing to many companies, particularly blue-chips, it won’t mean a lot if others don’t back it. Fidelity’s most obvious supporters ought to be insurance companies and pension funds, both of which need long-term investments to match long-term liabilities.
Their voting records will make interesting reading in three months’ time.
- 1 The difference between a migrant and refugee, in one sentence
- 2 Miley Cyrus calls out hypocrisy of women’s nipples being taboo
- 3 Celebrity Big Brother 2015: Tila Tequila kicked off show after 'describing Hitler as a good man'
- 4 Watch the Supermoon live: How to see the brightest Moon of the year tonight
- 5 iPhone 5c to be discontinued, no iPhone 6c to replace it
Spain accused of 'provocation' after letting Russian submarine refuel off Gibraltar
The difference between a migrant and refugee, in one sentence
Allonautilus scrobiculatus: World's 'rarest' creature spotted for only the third time ever
Miley Cyrus calls out hypocrisy of women’s nipples being taboo
Bangkok Bomb: Thai police name Adem Karadag as suspect arrested over blast that killed 20
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
Stock up on canned food for stock market crash, warns former Gordon Brown adviser
Labour leadership: Jeremy Corbyn voters most likely to believe 'world is controlled by a secretive elite'
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...