Shareholders get their man in the end

A rare example of shareholders anger over excessive remuneration bearing fruit has been seen with the giant oil company Shell.

Bonuses awarded to Shell executives this year were widely considered to be excessive and the remuneration committee came in for intense criticism.  The committee felt it proper to award significant bonuses even though performance targets had not been met.

The usual symbolic exercise of shareholder rights took place (see previous posts on this subject) and the pay settlement was voted down at general meeting.  Now it is reported in The Times that two members of the remuneration committee, including the chairman Sir Peter Job, will step down.  It looks like the shareholders did get their scalps after all.

One other interesting thing about the reporting of this event is that Shell itself seems to have come to the view that after 9 years as a non-executive director (NED) Sir Peter could no longer be considered to be truly independent.  This reflects other discussions currently being had about the role of NEDs and suggests that the days of a NED having a long term sinecure are now well and truly gone.

More shareholders flexing their puny muscles

Marks & Spencer, which has suffered a spate of boardroom battles over the years, continues to provide examples of institutional shareholders attempting to exert control.

The latest shareholder intervention occurred at the recent AGM of the company when a group of institutional shareholders lead by local government pension funds sought to bring forward the appointment of an independent chairman.  Currently Sir Stuart Rose occupies both the roles of chief executive and chairman which on the face of it is a deviation from the corporate governance code promulgated by the Financial Reporting Council.

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Shareholders’ Rights / Electors’ Rights

There has been an avalanche of articles about the scandal of MP’s expenses as the Daily Telegraph drip feeds us the latest salacious details.  My own perspective is to consider the parallels with shareholder disputes and the timely exercise of shareholders voting rights at Shell’s AGM provides an interesting comparison.

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Shareholder control of Directors

There have been a number of recent instances of shareholders venting their anger at general meetings and refusing to agree company accounts or the remuneration packages of directors.  Whatever the cathartic value of such actions, in practice these protests have no more than symbolic value.

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