Simon Fraser is fighting for hearts and minds at the Investor Forum
3 July 2014 1:58am
Does someone at the new body set up to promote investor long-termism have a bizarre sense of humour?
That was one interpretation of yesterday’s confirmation that Simon Fraser, former global chief investment officer of Fidelity, would be its first chairman.
After all, Fraser was until recently a board member at the bete noire of City fund managers: Barclays. And true, he served on the remuneration committee of the scandal-hit bank for several years.
Still, there’s good reason to judge that with his appointment, the Investor Forum has laid solid foundations.
Fraser has a blue-chip reputation, his Barclays sojourn aside, but in any case recent experience of having his feet held to the fire will be useful if the new body is to make a genuine difference.
It’s worth recalling why the body is being set up: to create a sense of collaboration between asset-owners, asset managers and companies; and providing a more powerful focus to address problems where long-term wealth creation is being jeopardised.
A cornerstone of last year’s report by Professor John Kay, which had been commissioned by Vince Cable, is that it is right to target reforming wayward governance and reining in recalcitrant executives.
Such a need for greater oversight has been reinforced time and again, not least at Barclays and other banks.
So the mandate of the Investor Forum to form so-called engagement action groups which will “take escalating action when issues of concern arise” must pack the punch it promises.
History suggests that delivering that will be a tall order.
GULF BOARD PLAYING KEYSTONE COPS
Sports Direct, Essar Energy and, er, Barclays: there have been plenty of candidates in 2014 for the new shareholder engagement body to get its teeth into.
But if Fraser et al want to be really ambitious on day one, they could do worse than taking aim at Gulf Keystone Petroleum.
The Kurdistan oil explorer has only just made its debut on the main London market after transferring from the Alternative Investment Market, but its behaviour is that of a war-torn veteran.
In a letter to investors last week, Simon Murray, Gulf Keystone’s chairman, employed the audacity befitting a former French Legionnaire by claiming its prospects could be irreversibly damaged if Todd Kozel is voted off the board.
Vague and impossible to corroborate, it was typical of pronouncements made by the company’s board over the past two years – during which time the shares have fallen by more than 50 per cent.
Worse, the timing of disappointing production news soon after executive share options have vested has left a clear impression that the firm is run entirely for the benefit of managers, not investors.
While Kozel is stepping down as chief executive, his power-base looks perversely more entrenched by the ousting of the independent directors elected last year.
Now, sources allude to possible “improprieties” in the way the directors nominated by disgruntled shareholders last year were evicted.
Murray, of course, has a reputation for doing – and saying – unconventional things. In 2011, he declared that women make unsuitable company bosses because they prefer to bear children.
As the search for Kozel’s successor gets underway, then, investors can at least be sure of one thing: Gulf Keystone’s new chief executive won’t be a woman.
WALGREEN SPLIT ON BOOTS DEAL
Stefano Pessina’s thirst for deals is unlikely to be quenched soon.
The chairman of Alliance Boots is closing in on a full takeover by Walgreen, which already owns 50 per cent of the business.
But will it involve an inversion structure that will involve the US healthcare giant relocating its tax base to the UK?
One source close to Walgreen’s board tells me that directors are split on the idea of a move that may be perceived as “un-American”.
Mark Kleinman is the City Editor of Sky News @MarkKleinmanSky