Friday 29 March 2013

Terrible TINA

Another snippet from Liquid Modernity, which is one of the best things I have read for a long time. He's actually talking the role of sociology in this section, but I think it applies more widely -
Nothing is less innocent, Bourdieu reminds us, than laissez-faire. Watching human misery with equanimity while placating pangs of conscience with the ritual incantation of the TINA ('there is no alternative') creed, means complicity. Whoever willingly or by default partakes of the cover-up or, worse still, the denial of the human-made, non-inevitable, contingent and alterable nature of the social order, notably of the kind of order responsible for unhappiness, is guilty of immortality - of refusing to help a person in danger.

Wednesday 27 March 2013

Teamsters call on National Express to respect workers rights

This is interesting, there have been long-standing complaints from US trade unionists about how the National Express US schoolbus business Durham School Services treats its drivers. They are now starting to talk to people in the UK, where the business is listed, about it.

U.S. School Bus Workers Join UK Trade Unionists
(BIRMINGHAM, England) – Teamster school bus drivers who work at National Express Group PLC (NEX: LN) rallied with British members of Unite the Union outside the company’s headquarters today, demanding the multinational transport company honor the human rights of its North American workers.
The drivers expressed their concerns over what the union believes are National Express’s anti-worker, anti-union policies in its North American operations, which includes Durham School Services L.P. (“Durham”) in the U.S. and Stock Transportation in Canada.
They delivered a letter from Teamsters General President Jim Hoffa to National Express Group Chief Executive Dean Finch, calling on National Express to better respect the rights of its workers. Read the letter at
“It is deeply concerning when a United Kingdom-based public limited company engages in conduct that violates U.S. workers’ rights and deprives them of decent working conditions and respect. National Express’s subsidiaries should be operating in the pursuit of the highest standards, not failing to uphold the human rights that should be afforded to all its workers throughout the world,” Hoffa said.
Sebrina Isom, a former Durham driver and member of Teamsters Local 509 in West Columbia, South Carolina, USA, came to England for the second year in a row. The 25-year school bus driver traveled there to speak up for U.S. school bus workers.
“We are here to hold this company accountable. In my view, their anti-worker behavior has to stop,” Isom said. “We transport children, we work hard and it’s not too much to ask that National Express take more responsibility and treat us with fairness and respect.”
“I believe National Express has earned the reputation in all its operations as being the most hostile of the big British employers toward its employees,” said Tom Cashman, a National Express driver and shop steward from the South East coach station.
The delegation of Teamster school bus workers is meeting this week with major National Express stakeholders—union leaders, investors and political leaders—about the company’s negative human rights and labor relations record in North America.
The National Labor Relations Board (NLRB), which oversees U.S. labor law, issued 57 informal complaints since 2001 against Durham. These complaints resulted in settlements.
The complaints came as a result of charges by Durham workers, including disparate treatment, discipline and discharge of employees engaged in union organizing; surveilling workers engaged in union activity; and threatening workers with reduction in benefits, working conditions and the loss of employment for supporting unionization.
Durham recently filed objections with the NLRB to the union election in Santa Rosa County, Florida, USA, despite a strong vote in favor of unionization by the workers. The company claimed that the NLRB held no authority to investigate or hold a hearing, relying on a recent court decision—a theory that the Teamsters believe would disenfranchise the workers. The NLRB’s decision is pending.
“We voted overwhelmingly to have our union, but the company is not respecting our decision,” said Diane Bence, a Durham driver from Santa Rosa County who traveled to Birmingham, U.K. “Durham told us they would respect our vote, but that was before we voted. After the vote, the company didn’t respect what the majority of us wanted.”
National Express is the second-largest operator of school bus services in North America. The Teamsters represent 4,700 National Express workers. The company reports that 94 percent of the U.K. work force is covered by a collective bargaining agreement, as compared to only 32 percent of its North American work force.
Drive Up Standards is a global campaign to improve safety, service and work standards in the private school bus and transit industry. For information on the Teamsters Drive Up Standards campaign, go to
Founded in 1903, the Teamsters Union represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit for more information. Follow us on Twitter @Teamsters and “like” us on Facebook at

Tuesday 26 March 2013

UK unions take big step forward in capital stewardship

I am, to put it mildly, quite pleased to see this new initiative from the TUC, Unite and Unison. Getting the unions to vote their shareholdings in a co-ordinated way is something I've always thought was a really good idea. I know it took a lot of hard work over a long period to pull this off, so massively well done to those involved, you know who you are!

Now let's see how it works in practice...

New share owner group will ensure union values are reflected at company AGMs

The TUC and its two largest affiliated unions, Unite and UNISON, are today (Tuesday) launching Trade Union Share Owners – a new group which aims to put union values at the heart of the world of corporate governance, with a new approach to the way in which their investments are voted on at company AGMs.

From now on at any AGM of a FTSE350 company where either the TUC staff pension fund or those of its two biggest unions hold shares, the group will work with shareholder advisory group PIRC to ensure that their funds take a common voting position in accordance with a new set of policy guidelines drawn up by the TUC.

Covering such issues as the membership of boards, the advertising for new director posts and the level of top directors’ pay and bonuses, the TUC guidelines and Trade Union Share Owners are being launched later today at PIRC’s annual corporate governance conference in the City.

The three organisations will start out with over £1bn of assets between them and the TUC hopes that many more of its affiliated unions will want to get involved in the coming year, as they see this new, co-ordinated approach as an effective way of getting workers’ voices heard in company boardrooms.

The new voting and engagement guidelines have been drawn up to ensure that corporate governance policies that unions have long been critical of – all-male boards, excessive director pay and bonus packages, and the non-advertisement of new director positions – will be challenged by union voting at company AGMs.

The TUC has long been concerned that when fund managers of union pension funds vote on remuneration reports at company AGMs, they often do not reflect the views of the ordinary people whose money is being invested. This is something that the TUC’s Fund Manager Voting Survey has highlighted over the last decade.

In an attempt to bring a more common sense approach to directors’ pay and the make-up of company boards, the three organisations will be using the voting and engagement guidelines to ensure that wherever their money is being invested, any votes are a genuine reflection of their views and of the ordinary members of the three pension schemes.

Commenting on the new guidelines, TUC General Secretary Frances O’Grady said: “This initiative represents a new approach to tackling corporate irresponsibility for unions. From now on the TUC, Unite and UNISON will be voting in line with our values at company AGMs. Our doors are open to all unions and other organisations who want to join us to bring about a change in the way corporate Britain runs itself.

“The UK’s families might be struggling to cope with the biggest squeeze on their incomes in living memory, but that hasn’t discouraged top directors from awarding themselves austerity-busting pay and bonus packages worth millions.

“It’s time to inject a long overdue dose of reality into British boardrooms and we are going to use the power of our pension funds to make a difference and to encourage a new and more responsible corporate Britain.”

UNISON General Secretary Dave Prentis said:”I am very pleased to announce the participation of UNISON’s staff pension fund in this new labour movement initiative.

“Unions are all about collective principles and action to enable progress and tackle inequity. Now we can demonstrate this with our collective investment power. We will be active shareowners of FTSE companies, in the interests of our scheme members and other stakeholders in the companies our funds own. We will be modern, responsible investors.”

Unite General Secretary Len McCluskey said: “Unions must use all the means at their disposal to fight for social justice. This is why Unite and its sister unions are launching this share owners initiative. Trade union values of decency and fairness ought to be present in the boardroom, but if we cannot trust that they will be then we need to use our share ownership to influence corporations.

“All too often, business takes decisions that are bad for this country and its people. Last week, just as the Chancellor was demanding more austerity from working people, Barclay’s executives rewarded themselves share fortunes worth £40 million.

“This is a clear reminder that corporations need to be forced to behave responsibly. Unite will now be doing just that by putting our values at the heart of corporate governance.”

The trade union voting and engagement guidelines contain a variety of policy positions including:

·     Moves to limit the growing gap in the pay of those at the very top and bottom of companies, with the aim of achieving a 20:1 pay ratio, and for pay increases to directors to mirror those being offered to ordinary employees.
·     Persuading all companies to become living wage employers on the basis that decent wages lower staff turnover and absence rates, and lead to a more motivated, productive workforce.
·     Encouraging companies which are keen to include worker representatives in their corporate governance structures.
·     At least a quarter of the board positions to be held by women.
·      All board vacancies to be advertised, rather than people simply being invited to join.
·     A limit to the number of board positions that directors can hold. Where individuals are unable to devote enough time to their role their re-election should be opposed.

Monday 25 March 2013

"They'll just move to Switzerland..."

It's been a popular refrain of opponents of pay restraint for high earners in the City that if we put too much pressure on the 'talent' will leave the UK to work somewhere that really values them. For a long time Switzerland has been one of the places highlighted as the destination of those taking part in a future tax exodus (movement of ok yah people).

Obviously the success of the Minder Initiative has put a slight dent in this. The Swiss public apparently aren't any more convinced than their counterparts here that our corporate leaders can't cope with a little austerity of their own. As a result of Minder's campaign, Swiss companies will have to introduce a binding shareholder vote on pay, and there will also be a ban on golden hellos/handshakes. This goes a little bit further than the UK's regime, though still is very much within mainstream corporate governance territory.

But it isn't over yet. The youth wing of Swiss Social Democratic Party is now putting forward its own proposal to limit internal company pay ratios to... ahem.... 12:1. This is so no-one earns more in a year than anyone else in the same firm earns in a year. Apparently initial polling suggests that almost half the Swiss public like the idea. Needless to say, if enacted this would a pretty serious shift, I can't imagine the Swiss business community or Swiss shareholders liking this one bit. But that's the Swiss political system for you.

It also shows just how far the mainstream of corporate governance opinion is from public opinion on executive pay. I personally think that, unless this gap is addressed, exec pay is the issue that undermines a lot of what we currently take for granted in corp gov land.

And you bankers out there had best put off buying those tickets eh?

Saturday 23 March 2013

Nice Richard Rorty quote

Picked this up from Zygmunt Bauman's LSE lecture (he uses a lengthier quote) I just listened to on iTunes. I believe it comes from the book Philosophy and Social Hope.

We should raise our children to find it intolerable that we who sit behind desks and punch keyboards are paid ten times as much as people who get their hands dirty cleaning our toilets and a hundred times as much as those who fabricate our keyboards in the third world.  We should ensure that they worry about the fact that the countries which industrialised first have a hundred times the wealth of those which have not yet industrialised.  Our children need to learn early on to see the inequalities of between their own fortunes and those of the children as neither the will of God nor the necessary price of economic efficiency but as an evitable tragedy.  They should start thinking  as early as possible about how the world might be changed so as to ensure that no-one goes hungry while others have a surplus. 

Thursday 21 March 2013

Safestore AGM - some interesting votes

RNS on the AGM here. There was a vote of (almost) 20% against the rem report (res 8). Also a vote of 15% against a share issue authority (res 10). And 20.5% against a notice for meetings resolution (res 13).

The last vote probably tells us that some overseas holders are involved. Looking at its annual report we can see a few big "ex-UK" investors amongst its notifiable holders -

CBRE Global Investors 6.75%
BNP Paribas Investment Partners 6.48%
APG Investments 5.89%
Morgan Stanley Investment Management 5.82%

Also, cos I'm a voting data nerd, I know that Morgan Stanley is one of the managers that routinely opposes this type of resolution, see its voting record here (PDF). Their position is a little odd as, although the parent is obviously US, it has a long-standing UK operation. You might have thought, therefore, they would vote more like a UK investor (all of whom - for the votes I can see - support this type of res) than an ex-UK one. 

Tuesday 19 March 2013

The Leveson (lack of) effect on share prices

Being the sad type of person I am, I thought I would go and have a look at what happened to the share prices of listed media companies yesterday, The Day The Free Press Died.

I'm not saying that this tells us anything particularly insightful, but I thought it was worth a look. First up Daily Mail & General Trust, owner of the paper that backed Oswald Mosley's British Union of Fascists. Its share price...err...went up. (NB - I'm linking to 5-day views)

What about Trinity Mirror? Its share price went down initially, then recovered a bit (down about 10% on the day). But if we look back there was a far steeper drop on the 14th - the morning the hacking arrests were announced (and I wonder if the Monday fall wasn't a bit of an overspill, given the potential for more cases as revealed in the 'supergrass' story that the Indy reported).

I also looked at two non-UK companies with big UK operations - Thomson Reuters was basically unchanged, and News Corp was up a bit

Again, I wouldn't read much into this, for all the usual reasons about finding anything you want in share price movements. I think all we can safely say is that investors in Trinity Mirror were spooked by the hacking arrests. But it doesn't obviously look like investors in media companies are (yet?) worried about the impact that the Leveson deal will have on their investments.

Going a bit further, we cannot assume that this means a lot in terms of whether we have a free press or not. After all, some investors in media companies might prefer a muzzled press, as it might be less likely to end up facing some or other form of retribution, with knock on financial effects. Where this leaves people who argue that the only only guarantee of editorial independence is profit is a another question... 

Still, the immediate impact of Leveson on investors' assessments of media companies may be not much at all.

Friday 15 March 2013

BSkyB 2011/2012 AGM voting

Being the voting data geek that I am I've been trying to pull together all the voting data I can for last year;s BSkyB AGM, and specifically the vote on James Murdoch's re-election. Here's a comparison of how various asset managers voted on JM's election in 2011 and, where I can find a vote, 2012

Asset Manager     2011 vote    2012 vote
Aberdeen             Oppose       For
Aviva                   Oppose       Oppose
BlackRock           For            ?
Capital                 For*            ?
F&C                    Oppose       For
Fidelity                 For              ?
Goldmans            Abstain         ?
Hermes               Oppose         ?
JP Morgan          Oppose         ?
Jupiter                 Oppose         For
Kames                Oppose         For
L&G                   Oppose         For
M&G                  For               For
Martin Currie       Abstain         ?
Newton               Oppose         Oppose
Royal London      Oppose         For
Schroders            Oppose         ?
Standard Life       Oppose         For
State Street          Abstain         ?
SWIP                  For                For
UBS                    Oppose         For

* got this via US mutual fund disclosure

Thursday 14 March 2013 thought can't be bought...

A bit from Zygmunt Bauman (this one) describing Adorno's attitude to the value of thought
The less a thought can be explained in terms familiar to and making sense to the men and women immersed in their daily pursuit of survival, the nearer it comes to the standards of humanity; the less it can be justified in terms of tangible gains and uses or the price-tag attached to it in the superstore or at stock exchange, the higher its humanizing worth. It is the active search for market value, and the urge for immediate consumption , that threaten the genuine value of thought.    

Blogpost title via Senser :-)

Weird coincidence

Dunno if there's anything in this, but worth logging.

1. Four Trinity Mirror current or former employees arrested.

2. Chair of Trinity Mirror's audit & risk committee to stand down.

Monday 11 March 2013

Bankers bonuses, again!

Great blog post from the Indy's Ben Chu here. The only reason we know how many bankers earn £1m+ is because the banks are disclosing more information than George Osborne wanted them to.

Friday 8 March 2013

Bankers and the top rate tax cut - another update

OK, as I thought it looks like there was a bit of expectations management around Barclays. It actually has 428 employees earning £1m+, not 600.

So adding that to the HSBC figure we get 632 £1m+ employees across those two banks. RBS figure is rumoured to be around 200, UPDATE: according to the Guardian's Jill Treanor the RBS total is 92,
so Lloyds and Standard Chartered might push the total over 1,000 for all the UK-listed banks.

Of course not all these will be UK taxpayers, though.

Wednesday 6 March 2013

Clarity on bonuses

Updated: Andrew points out that he wasn't responding to the bonus cap, it's an old piece.

Andrew Lilico has turned in a pretty comprehensive case against the bonus cap on Conservativehome here. However, I think he is wrong a lot of points, and some of what he says contrasts with pretty mainstream corporate governance thinking. So here is a response:

Argument: Bonuses create loyalty.
"Retention" is one of the holy trinity of arguments (along with "attract" and "motivate") in favour of high pay in general and incentive schemes in particular. It is also perhaps the weakest. It is routine for companies to compensate new recruits for loss of awards from their existing employer as a result of moving. This is very common practice and basically destroys the idea that incentives work to retain. Incidentally this even happens when sometimes companies make "retention awards". As the ABI executive pay guidelines say: "Shareholders believe that retention awards for main board directors rarely work. Retention concerns on their own are not sufficient grounds for remuneration to increase."

Argument: Bonuses manage risk.
I have no doubt that in the past there was a bit of truth that greater variable pay enabled firms to manage costs, and it may still be true for smaller firms. But when you look at the big banks, actually staff costs are pretty stable (as Ben Chu points out here). But in any case, what we are talking about is a bonus cap, not eliminating bonuses. This still gives banks the ability to reduce staff costs by up to 50% through changes to variable pay alone.

Argument: Bonuses allow targeted rewards.
The existence of clawback and bonus-malus policies should prove just how difficult it is to both indentify individual contributions and be sure that they were in the long-term interests of the business. But, again, the EU is not seeking to eliminate bonuses entirely, merely to cap their value as a % of salary. 

Argument: Bonuses can be aligned with particular company or individual objectives.
I think this is where we need to be particularly careful. In terms of tying bonuses to specific company outcomes, like a successful deal, this is something shareholders have generally disliked. This is because partly they think that some things that get rewarded are part of the job (I have seen bank rem policies where directors get rewarded for stuff like getting on with regulators and meeting regulatory requirements). In addition there is a danger that the particular action in question that is rewarded might look good in the year te award is made, but turns out to be a disaster. Here's the ABI again: "Shareholders do not support of the practice of paying transaction related bonuses."

On individual targets, it's unfortunate that the example given is tying sales team awards to numbers of sales made to particular customers. The FSA recently published a paper showing how difficult it was to get sales incentives right in financial services, and how it easily leads to mis-selling. Notably it was titled 'The risks to customers from financial incentives'.

Argument: bonuses incentivise effort and quality
I have dealt with these kinds of arguments a lot over the past three or four years so won't rehash them. My understanding, having read quite a bit of the literature on this stuff, is that incentive pay works best for simple and easily measurable tasks and where motivation to do the job is low. It is not clear that people at a very senior level (who, presumably, don't do simple jobs) even like variable pay that much, as remuneration consultants PwC found.

Argument: bonuses build esprit de corps
I think this may have some truth if there is a genuinely company-wide policy. But I wonder how many Barclays employees were thinking "Go team!" when they found out what Bob Diamond was getting last year. Again the psychological literature seems to show that people value fairness, or reasonableness, in rewards, and will even incur a bit of a loss to punish others who they see as taking too much. In a sense, the whole argument about bankers' pay is, as someone on Financial News wrote a whike back, a big version of the ultimatum game. The banking lobby has said for years that we have to pay them a huge amount, or they will leave the UK taking tax revenues with them. What we have seen in the past few years is public opinion harden to the extent that - offered that ultimatum - they will reject it, even with the threat of losing out personally.

Bonuses as contractual entitlements
Some people suggest that not paying bonuses would somehow breach contracts. I can only speak from my own experience here, but I have read quite a few executive director contracts (not bankers though) to get to the bottom of exactly this point. In almost all of them the language relating to bonus and incentive schemes wav very vague, and many said that awards were at the discretion of the remuneration committee. Notably this point was proven in the row over Stephen Hester's bonus last year.

Tuesday 5 March 2013

Unite on the bonus cap

Can't help thinking that 'strategic genius' George Osborne has got himself in a stoopid place again.

Here's Unite sticking the boot in:

Osborne defends the indefensible on bankers' bonuses

05 March 2013
Unite, Britain's biggest union, has accused George Osborne of "defending the indefensible" today (Tuesday 5 March) by telling EU finance ministers in Brussels that he could not support proposals to limit bankers' bonuses to a year's salary.
Unite general secretary Len McCluskey said: "George Osborne is defending the indefensible by opposing a cap on bankers' bonuses. Britain needs a chancellor who will fight for our public services, not for a tiny elite with telephone number salaries. The chancellor is happy to cap the welfare payments of those struggling to get by, but not the bonuses of the casino bankers who caused the economic crisis. 
"Along with Ukip the Tory-led government is alone in Europe in opposing a cap on bankers' bonuses, even the Swiss in a referendum supported curbing bonuses.
"The chancellor is on the wrong side of every argument and out-of-touch with the people of this country. From April millionaires will get a £40,000 tax cut while  record numbers of young people are unemployed and our economy flatlines. Britain desperately needs a new chancellor with some radical fresh thinking who will do more than just help his chums in the city while millions struggle to make ends meet." 

Cox Review on short-termism

Labour's own review of potential policy responses to short-termism, led by former IoD head Sir George Cox, is out and can be downloaded here.

Will try to blog on it later, but notable that there is a practical proposal for dealing with the way that M&A is voted on. Rather than a specific qualifying period, the proposal is that you can only vote on a deal proposal if you were on the share register at the time the deal was announced. However Cox does seem sympathetic to a qualifying period and says that this may need to be revisited.

Notably M&A was one of the areas where the Kay Review was weakest in terms of recommendations. In addition this is one area where I suspect that many business people do think a less economically liberal approach would be worthwhile. So there's a good bit of distance between Labour and the Coalition on this.

PS. Also spotted this -

There is also an important consideration of motivation of a company’s workforce to support the pursuit of a long-term vision, accepting change en route. Trade unions argue that the best way to bring this about is by having worker representation on boards, as is the case in Germany.
However, the many arguments for and against such a move are outside the scope of this study.

Bankers and the top rate tax cut - update

Confirmation via that 200 HSBC staff take home £1m+.