The extraction by Sir Philip Green of £300m from BHS, which led to the business going into decline and leaving the company pension scheme under-funded before he sold it for a £1 to an unqualified chancer was strongly criticised by a select committee of the House of Commons yesterday. To quote from their report: “The tragedy is that those who have lost out are the ordinary employees and pensioners. This is the unacceptable face of capitalism”.
This echoes the comments of Ted Heath on Tiny Rowland of Lonrho where the mud certainly stuck for a very long time.
But I was reminded of that phrase also when I asked a question at the National Grid AGM yesterday. I raised the issue of the number of jobs the Chairman Sir Peter Gershon had, particularly as at the previous AGM he did not seem to be aware that the CEO was planning to leave (the news was given in a press item which he denied at the AGM but a few months later it turned out to be true). Did he have his finger on the pulse of the business at the time was a point I made. Sir Peter also chairs Tate & Lyle and has several other positions. This is contrary to ShareSoc’s policies. It is particularly problematic when a Chairman holds more than one such role in a larger company (Tate & Lyle is now a FTSE-250 company but it is still relatively large and National Grid is one of the largest FTSE-100 companies).
Moreover, the Senior Independent Director pointed out that he did not consider it a problem as Sir Peter is only contracted to do 2 days per week. So how much does he get paid for this? About half a million pounds per year!
This seems rather excessive to me, and unjustifiable. He should do more hours and/or get paid less I suggest. So how many investors voted against the Remuneration Report or against the Chairman? Actually only 2.9% and 1.4% respectively.
Surely this is the kind of “unacceptable face of capitalism” that our new Prime Minister, Theresa May, has said she will tackle. But it will take a lot more than improved reporting and more votes on pay to tackle this problem.
Sir Peter was only slightly less dogmatic in his approach to responding to shareholders questions than he was the previous year. I will write a full report for ShareSoc members as soon as possible.