Fat Cats on Diet?

There was a good article in the Daily Telegraph this morning in which I was quoted. It was headlined “Will the fat cats finally be put on a diet by shareholders?” and gave an overview of the attempts to rein in executive remuneration and the likely impact this year.

But I expressed scepticism to the reporter and this is what it printed: “Roger Lawson, deputy chairman of ShareSoc, which speaks on behalf of thousands of retail investors in the UK, argues that an AGM vote is too late in the day to alter pay policies. He would like to see companies install shareholder committees with direct input on the issue”. I was also quoted as saying “The best way to solve the problem is to change the remuneration committee and its members – to have outsiders on the committee or the board.”

That’s certainly a fair summary of my personal views and ShareSoc is certainly promoting the merits of Shareholder Committees to tackle the problem of executive pay and other corporate governance problems. Ultimately the existing remuneration committees will never solve the problem alone because the directors are beholden to other director for their jobs. One needs to understand the dynamics of company boards to see that little will change unless outsiders have more influence. In addition I pointed out that institutional investors are often reluctant to vote against the recommendation of boards because they may lose access and in any case swim in the same high pay pool. But other people quoted in the article suggested that attitudes were changing. We will see.

The full article is present here: http://www.telegraph.co.uk/business/2017/03/27/shareholder-spring-2017-year-investors-win-war-ceo-pay/

Roger Lawson