Anthony Hilton: Sorry, but shareholders just don’t have the power

Executive pay continues to fester.

On Tuesday, on the fringes of a conference organised by the National Association of Pension funds, the trade association which has played a big part in organising the unprecedented shareholder protest of the past few weeks, the concern was about what it could do as an encore.

Obviously it can keep up the pressure, but the danger is that familiarity could easily breed contempt – the more often voices are raised in protest the less effective those protests will become. Having surprised themselves with the amount of success they have had, shareholders do not now want to over-reach themselves and make obvious how limited their power actually is when confronted by a recalcitrant board.

In a white-collar version of the good cop bad cop routine, there was a sense that shareholders should take the opportunity while companies remain on the back foot to engage discreetly with those boards which seem to share their concerns about current excess to see whether they can engender a change in their pay culture.

It seems like a bit of an anti climax. But while it sounds romantic, talk of a shareholder spring is misleading. The uncomfortable truth is that under the current system meaningful change can only come from within. Shareholders simply do not have the power – and still will not have the power even if the Vince Cable reforms on votes and vetoing of rewards for failure make it into law – to force boards to do what they don't want to do

a.hilton@independent.co.uk