Monday, 9 January 2012

Binding shareholder vote falls flat

It has to be a bit of a rarity for a proposed corporate governance reform to both be big a big news story and be immediately trashed by just about everybody. But that is what has happened in response to the proposal by David Cameron yesterday that shareholders should get a binding vote on pay. I said it might be seen as a duff idea, but I had no idea it would fall this flat.

You can find a critical news story in pretty much all the papers today, many of them quoting significant bodies (CBI, NAPF, IMA etc) saying it won't achieve much. You can try the Telegraph, Mail, Indie, Grauniad, Pesto again, Citywire etc etc etc. What's more if press calls today are anything to go by there will be more scepticism about the proposal expressed in the papers.

The main points that have been made are that asset managers (who control most of the votes) aren't bothered about pay, haven't used the rights they already have, and might be conflicted because they are well paid themselves. These are all simple points that the average punter can easily grasp, and it's straightforward enough to present this as Cameron proposing an ineffectual reform rather than tackling a divisive issue. So I wonder if he might lose control of this issue. It's possible that the Coalition will now need to go further if the PM wants to look 'tough' on top pay. Pressing ahead with a binding vote without undertaking other significant reforms is not going to get a good response.

Interesting times.

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