Gilbert attacks governments over investing

By DOMINIC JEFF
Published on 06/03/2013 00:09

The head of one of Scotland’s largest companies yesterday accused governments of adding to the problem of short- termism among investors.

Martin Gilbert, co-founder and chief executive of Aberdeen Asset Management, said that as a “buy-and-hold” investor he was pleased that Sir George Cox’s review, commissioned by the Labour party, called for firms to be incentivised to take a longer view of success.

But he warned that measures should be carefully thought through and backed across the political spectrum to avoid disruptive “policy tinkering”.

“Business expansion, for example the building of a new factory, cannot be achieved over a couple of quarters. The returns generated from that investment flow through over years, not months,” Gilbert said.

“Arguably the problem has been made worse by policy tinkering from successive governments, which has done little to promote a long-term approach. It’s time for a political consensus to support the overriding objective that the equity investment chain should be to create long-term value in companies and long-term returns for savers.”

Cox, a former director general of the Institute of Directors, concluded that pressure for quick results was damaging UK business and holding back growth.

He recommends extending the governance code so that more long-term incentives are incorporated into directors’ pay, as well as changes to the tax system to reward investors who stick with a company. He also wants to see a mechanism to ensure that decisions on infrastructure investment are made independently of political cycles.