Comment: Vikings waiting to slaughter boards

Martin Flanagan

Martin Flanagan

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THE cliché has it that what goes around comes around, and in few milieus does it seem to apply so well as shareholder revolts against boardroom pay. Periodically, things go quiet on the investor indignation front at corporate largesse, perhaps when company performance has been decent and there is nothing egregious to fulminate at.

But then you hear the portentous horn of the shareholder Vikings out at sea, and the inhabitants of Boardroom Village scurry around in fear of pillage, at least in a public relations sense.

It is too simplistic to see it as being due to the looming general election, but we seem to be in one of the more confrontational corporate remuneration phases again.

Perhaps the most glaring example is the potential £25 million Helge Lund will earn at oil and gas group BG in what amounts to a caretaker chief executive role while Royal Dutch Shell takes over the company.

Still in the energy sector, we had the investor pay revolt at Centrica, with one in three investors failing to back the Scottish Gas owner’s remuneration policy, particularly elements of the package given to new chief executive Iain Conn. That is worth up to £3.7m this year after he joined Centrica in January.

Last month nearly one in four shareholders voted against HSBC’s pay and bonus deals, a fact that largely got swallowed up by the focus on the bank’s suggestion at the agm that it was again formally considering moving its group HQ out of Britain.

Pharmaceuticals giant Astra­Zeneca has riled shareholders with generous awards handed to directors that are not linked to revenue targets set out at the time of its defence against last year’s takeover approach from Pfizer.

And former Royal Bank of Scotland boss Stephen Hester, now at the helm of RSA, faces a pay revolt at the forthcoming AGM of the insurer for a £2.1m pay and bonus package that is deemed a little de trop.

The excitement is welcome; it had gone a bit quiet on the outrage front. But it goes in phases. Think back to the Shareholder Spring of 2012, when investor revolts over remuneration claimed the scalps
of three not particularly loved chief executives: Andrew Moss at Aviva, David Brennan at AstraZeneca
and Sly Bailey at Trinity Mirror. Simon Walker, director-general of the Institute of Directors, said at the time: “To me it’s capitalism renewing itself. Those of us who believe in free markets ought to be shouting from the rooftops.”

There was a spate of protests at the pay of companies, including bookmaker William Hill, the hedge fund Man Group and banks such as UBS and Barclays.

But it did not become an annual Shareholder Spring, with this year probably bringing the biggest flurry of shareholder fireworks since 2012.

Even as it all dies down and goes quiet again, remember the pay revolt against the boardroom is a British tradition. We have been here before; we will be here again. «

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