ShareSoc has issued a press release noting our submission to the Parliament BIS Committee Inquiry into Corporate Governance. It requests more power for ultimate investors. Here is a brief summary of the contents (the press release includes a link to our full submission).
We suggest that the goal should be to get more power back to the ultimate investors. This can be achieved by:
– Ensuring that individual shareholders can exercise their rights, even if their shares are held in nominee accounts.
– Providing government and/or NGO support for representative organisations such as ShareSoc.
– Requiring a binding annual vote on the remuneration report and requiring companies to disclose the Pay Ratios.
– Introducing shareholder committees as outlined in the paper by Chris Philp MP “Restoring responsible ownership” so long as a representative of individual investors is included.
The views of individual shareholders tend to be under-represented. Part of the problem is the way that individual shareholders are disenfranchised through the way nominee accounts operate.
Individual investors do not have effective power to curb directors’ pay. Fund managers, who are merely intermediaries in the ownership chain, have usurped this power: but have patently failed to provide effective stewardship. They are responsible for creating many of the current problems, yet to date seem to have avoided blame. Why should we expect them to suddenly change their behaviour? It is time for a strong input from Government and regulators of the London Stock Exchange to change the framework in which we are currently operating. The goal should be to get more power back to the ultimate investors and hence make capitalism work for everyone.
Our full press release on our submission to the BIS Committee is present here: https://www.sharesoc.org/pr83-bis-submission.html
Roger Lawson 25/10/2016