Friday, 10 December 2010

A few thoughts on the LAPFF conference

Last week saw the annual LAPFF conference, as usual down in Bournemouth. Mr Gray has already blogged about it here, here and here (and pics here), but I thought I would post up a few of my own thoughts.

1. Sir John Parker from Anglo=American was very interesting, and definitely forward-thinking when it comes to corporate governance. For example, he really can't see what the fuss is about annual elections (which the board has already instated). But as always I found something to pick on! I'm interested in the metaphors people employ in their speech, as I think this tells you something about how they conceive a given situation. I was struck by the fact that Sir John used several turns of phrase that implied a structure whereby the board is at 'the top' and looks 'down'. For example, when discussing safety (and how great to hear a chair say that it is the first item on the agenda at each board meting) he said that the nature of reports given enabled the board to "see right down" to individual sites. I do not dispute that boards give directions that the organisation must follow, and as George Lakoff has demonstrated spatial metaphors are very common. But it did give a clear sense of a top-down view of the company.

2. Ex-Cadbury chair Roger Carr gave a really interesting presentation, but not actually what I expected. He did not say that a great British company had ben lost, and in fact went to some trouble to make clear how un-British it was pre-Kraft. He also didn't really have a pop at hedge funds, effectively suggesting that under the current regime then they didn't do anything wrong. In fact, the general thrust was similar to much of the business page commentary post-deal - Cadbury shareholders got a good deal, and the board held out for as long as possible, eventually surrendering for a good price. He said that if we weren't happy with what had happened then this implied legislative intervention, but he didn't give much indication that he favoured it. This is markedly different from what I was expecting.

3. Paul Myners was great and as usual got a very positive response from the audience (notably including non-Labour councillors there). One of his lines is that trustees should scrap quarterly meetings with their asset managers and instead use the meetings to discuss their investment beliefs, including what to do about stewardship. Funnily enough this message has already got through, as it was apparently mentioned at a trustee meeting our MD was at this week. More generally he was, rightly I think, sceptical about the extent of real reform in the wake of the crisis. Unfortunately the institutional investor community doesn't appear to have got the message. Just one example - what happened to the Institutional Investor Council, the new investor body announced in the summer? We should hear about the fees inquiry this month apparently, but no announcement has been made about the IIC's membership, remit or activities.

As Myners said at the conference, if real change is going to be achieved then it's going to have to come from the asset owners, not the intermediaries. Public sector funds have been the most active in all markets, but a lot more needs to be done. We also need to properly address the DB to DC shift and how stewardship is addressed in this context. Personally I found this year's LAPFF conference a real shot in the arm, but we need to be clear that the reform wave in the political sphere has broken, as evidenced by the capitulation to the banking lobby over pay disclosure. It's up to investors to take the lead now.

No comments: