Comment: ‘Shareholder spring’ may change bonus culture

IT HAS been described as the day that investors bit back – the beginnings of a “shareholder spring” even.In just a few short hours last Thursday, a string of blue-chip heavyweights saw investor frustration over boardroom largesse boil over.

Insurance giant Aviva, Hovis-maker Premier Foods and satellite operator Inmarsat were among the firms to feel the heat.

It was a day of uprisings capped off by the shock departure of Trinity Mirror boss Sly Bailey, brought down amid outrage over a new executive bonus plan.

What began as some banker bashing is now moving headlong into the normally staid environment of the annual general meeting, and no company in any sector can bank on an easy ride. To date, much of this ire has come from the direction of the private shareholder, outraged at seven-figure pay packets and bumper bonuses while dividends are slashed and potential nest eggs dwindle.

What makes this current revolt so different is the level of anger coming from the big institutions. Corporate backers such as BlackRock, Invesco and the investment arms of Aviva and Standard Life are leading the charge.

Amid the rebellion, heroes are emerging. One report yesterday hailed BlackRock’s global head of corporate governance, Michelle Edkins, as “the investors’ champion”.

The world’s biggest money manager, with an eye-watering £2.2 trillion of assets, BlackRock holds stakes in many of the companies that have suffered from an investor backlash in recent days. Clearly, a force to be reckoned with.

There is likely to be much more to come as the AGM season gets into full swing.

Investors advisory outfit Pirc, whose weekly alerts are becoming increasingly exhaustive, is urging its clients to vote against a number of proposals at the annual get-together of commodities trading Goliath Glencore. Those include a pay package that offers big bonuses to some senior execs without disclosing what targets they have to meet.

Further tensions could also emerge in the coming days at bookmaker William Hill and materials group Cookson.

Within many plcs, there is a growing disconnect between boardroom reward and shop floor reality, but no-one should bemoan financial reward where it is merited. Amid last week’s furore, news of a near-£1 million pay deal for Charlie Mayfield, the chairman of high street success story John Lewis, passed largely unnoticed.

Business Secretary Vince Cable is currently looking at whether to give shareholders more power by making the annual vote on remuneration binding, not advisory. There have also been calls to break the grip of the “old boys’ club” on boardroom pay.

There’s more than a whiff of revolution in the air and the opportunity for an overhaul and greater transparency should be warmly welcomed. Boards must sit up and take notice.

Winning mentality

GETTING into the Olympic spirit? Anyone stepping off a plane or train in London cannot fail to notice the imminent arrival of this summer’s Games.

Up here, and despite Glasgow playing host to some football matches, the enthusiasm has been a little more restrained.

Brewin Dolphin’s Scottish investment veteran Bryan Johnston has added to the air of scepticism, issuing a briefing note titled: “Don’t hold your breath for Olympic dividend.” One only hopes that we can brush aside the travel chaos, lost tourism millions, warships and missile launchers to pick up a medal or two.