ShareSoc has issued the following Press Release:
ShareSoc (the UK Individual Shareholders Society) welcomes the Government’s announcement today of a review of Corporate Governance in both public and larger private companies. It is good to see that the Green Paper both discusses the problems of executive pay and the influence of stakeholders other than shareholders on businesses while setting out a number of options for further reform.
As regards director pay, the document makes clear that despite more obligations on companies on reporting and voting on pay introduced in 2013, not a lot has changed in reality. Although there is widespread public concern about pay levels, the paper notes that the average vote in favour of remuneration reports was 93% (see page 19) and only one binding vote has been lost. ShareSoc certainly supports further significant reform in this area and have recently published our own policy document on pay.
The paper also highlights the difficulty that individual retail shareholders have in voting that arise from the widespread use of the nominee system, and refers to ShareSoc’s campaign on this issue (see pages 26/27). This problem reduces shareholder engagement with companies and the Government is suggesting that there are a number of options that could be considered to tackle this problem. ShareSoc is running a free seminar on Thursday covering this problem and the solutions.
The paper also states that “The Government wants to explore options for strengthening shareholder powers….” (see page 26). ShareSoc considers one of the best ways to do this is via Shareholder Committees as recently advocated by Chris Philp M.P., and previously by ShareSoc et al. The paper mentions this as an option.
In addition ShareSoc supports better representation of the views of other stakeholders such as employees, customers and others and the paper gives a number of options that might assist without changing from the principle of a “unitary” board as operated in UK companies.
In summary, this is good starting point to a wide debate on these issues. ShareSoc will be issuing a response to the consultation in due course.
The Government Green Paper is present here: https://www.gov.uk/government/consultations/corporate-governance-reform