Wednesday, 3 October 2012

Labour and corp gov

There were only a couple of passing mentions in Ed's speech to corp gov type issues - including committing to the scrapping of quarterly earnings. However according to The Grauniad a briefing doc was issued alongside which had makes the following suggestions:
• Giving long-term shareholders a greater say in the direction of a firm by restricting votes on a takeover to those already holding shares when a bid is made. That would lock out hedge funds, which snap up shares in the hope of profiting from a takeover. Labour claims the takeover of Cadbury by Kraft was driven by such speculators.
• Abolishing rules requiring companies to produce quarterly company reports, since they force managers into short-term profit-making.
• Placing a duty on investors to act in the best interests of ordinary savers and to prioritise long-term growth of companies.
• Introducing a code forcing companies to publish their pay ratios, and placing a duty on directors to justify publicly why their ratio is 40:1 or more.
Points 2 and 3 are obviously already in the Kay Review - though, importantly, we still don't know if the Coalition intends to implement all of it. Points 1 and 4 have, essentially, already been considered and rejected since the Coalition took power. Takeover Panel was allowed to kill the first one off (well, govt chose not to challenge it's decision which said it's a company law issue & may not be a good idea). The Coalition itself chose not to pursue pay ratios.

As such Labour positioning on these issues is part occupying territory we know the Coalition now won't touch, and partly (it looks to me) goading it to enact key bits of Kay.

What we didn't hear (unless I missed it) was anything about other governance reform. I did see a couple of comments that suggested that Labour policy is for there to be an employee on every public company board (ie not just a rem comm member). If true, it's a further shift in thinking. Again, this is turf that the Coalition won't touch.

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