RBS AGM result and subsequent publicity

Paul Jackson wrote an in-depth analysis of the RBS Shareholder Committee campaign and the issues raised in the prestigious Investors Chronicle, 22 June 2018 issue, which is read by tens of thousands of investors. We are grateful to Paul and Investors Chronicle for giving us permission to reproduce this article. Click here: https://www.sharesoc.org/blog/shareholder-democracy/whose-company-is-it-anyway/

RBS AGM Result – Shareholder Committee Vote – We did well but it was a wasted opportunity

UKGI Votes were 75.3% of those cast. So their vote decided the outcome.

7.8% of shares were voted against, abstained or not voted. This excludes the 0.1% who abstained, by voting abstain. 6.4% of shares were not voted.

5,000 individual indirect shareholders voted via their nominee. We do not know which way they voted. We do not know how many did not vote. We do not know how many there are and neither do RBS. It could be a million, but no one knows.

Ignoring the UKGI votes, votes for were 604.99 million which was 5.5%. Of the non-UKGI votes in favour, they represent 94.5% of votes cast.

5.5% is a very surprisingly high vote in favour given the conflicts of interest that fund managers have in preserving the status quo. This is a truly remarkable result.

Our big wins were:

1. Commitment by RBS to continue with several shareholder meetings each year. Before we engaged with RBS, RBS had stopped these meetings. They now agree these are a valuable way of interacting with a key group of stakeholders.

2. Recognition that the nominee system is a problem. We hope to meet with RBS to persuade them to lobby the government about this.

One other point to add is that it takes time to turn around an oil super-tanker, or Boards or fund managers with entrenched views. This was only the first year. This year’s campaign and the vote at the AGM will make these people think again. We can expect more of them to change their minds next year. It will take time to win them over. These are deep-seated traits and prejudices embedded in people’s minds and organisations’ culture. Change does not happen overnight.

However, it was a disappointing vote by UKGI. We think it is inconsistent with their mandate. They are trying to sell the Government’s stake and so surely any means of listening to Shareholders should be embraced with enthusiasm. RBS needs a £20bn investment by new Shareholders to buy out the Government’s 70.48% stake. There is a danger of an overpowerful board and imperious Chairman and CEO – the Shareholder Committee can only improve this situation.

We are considering the relevance of the vote to BT, M&S, VCTs and smaller companies. M&S already have a shareholder committee and we will try and meet with them to discuss what lessons have been learnt. It may be easier to propose a shareholder committee to a smaller company and we plan to engage with one soon. If anyone would like to propose a company and lead a comparing, then please let me know.

Cliff Weight
ShareSoc Director and RBS Shareholder Committee Campaign Coordinator
08 July 2018