That is surely an appropriate headline to follow the selection of Theresa May as Prime Minister designate. That was particularly so when she promised to attack the company “fat cats” and vested interests.
Specifically for investors she said that “The people who run big businesses are supposed to be accountable to outsiders, to non-executive directors, who are supposed to ask the difficult questions, think about the long term and defend the interests of shareholders. As we have seen time and time again, the scrutiny they provide is just not good enough”. One cannot dispute that statement.
To tackle these problems she is proposing to have consumers and workers representatives on boards so as to widen the backgrounds of board directors and to have annual binding votes on remuneration.
In addition as regards Brexit she has said that there is a “need of course to negotiate the best deal for Britain in leaving the EU and to forge a new role for ourselves in the world. Brexit means Brexit and we’re going to make a success of it”. That shows a strong commitment to adhere to the result of the Referendum and all the consequences that implies.
In respect to board representation, there are a number of practical difficulties with appointing board members if they are to be constrained in some way. And appointing one or two workers representatives may not change the board dynamics significantly. The devil is in the detail on such matters.
Likewise on remuneration, we already have a binding forward-looking vote every three years in larger companies. If the annual vote on the Remuneration Report is made binding, does that mean that historic pay contracts and awards can be overturned by a shareholder vote?
ShareSoc looks forward to contributing to the debate on these issues. We certainly support some reform in these areas and have recently published our own guidelines on remuneration to try and encourage more restraint on pay – see https://www.sharesoc.org/ShareSoc-Remuneration-Guidelines.pdf
That of course is aimed at working within the existing legal and regulatory framework. But Mrs May seems to have more substantial reforms in mind.