FT Article on RBS and Shareholder Committees

The Financial Times have published an article under the headline “Investors fight RBS snub to shareholder committee move”. It covers the battle by ShareSoc to get the Royal Bank of Scotland to accept a resolution for their AGM to appoint a Shareholder Committee. See the ShareSoc campaign web page here for more explanation of the benefits of such a Committee and how RBS are currently thwarting shareholder democracy: https://www.sharesoc.org/campaigns/rbs/

One of the supporters of this concept to improve corporate governance and reign in excessive pay is Chris Philp M.P. and he is quoted in the FT article as saying that RBS’s rejection of the proposal was “outrageous” and showed “contempt” for retail shareholders.

RBS have suggested that their alternative proposal for a “stakeholder engagement panel” is a better way forward which would represent employees, customers, suppliers and other stakeholders. But as Mr Philp says “A stakeholders’ panel would be a talking shop and have no power and no teeth”.

ShareSoc Chairman Mark Northway likewise said a stakeholder panel would be “nothing more than a forum for RBS to listen to stakeholders, without any onus on them to react”.

Comment: a “stakeholder panel” is surely a much watered down and feeble variant of a shareholder committee. There may be arguments for putting other stakeholders on a shareholder committee but there are two key elements of the proposals for a shareholder committee: 1) is having a say on board nominations; and 2) having a say on remuneration proposals, before they are put to a vote at a General Meeting. However, the resolution proposed at RBS gives them wide discretion about how to implement the proposals.

Their consistent evasion of their legal obligation to put the proposal to shareholders just shows how adamant they are to avoid shareholders having a real say in the corporate governance of the company, or even deciding whether the resolution should be voted upon. ShareSoc will no doubt not let this matter rest.

Roger Lawson

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