One of Britain’s top captains of industry breathed a sigh of relief this week when he suggested to me that this year’s AGM season was passing off more peacefully than expected.
In one sense, he was right: there have been relatively few big pay revolts (AstraZeneca yesterday being the most notable exception), and no blue-chip companies have suffered the ignominy yet of a binding vote overturning their forward-looking remuneration policy.
And today, WPP – so often a lightning rod for City discontent over boardroom pay – will disclose in its annual report that Sir Martin Sorrell’s maximum pay opportunity will be slashed to just over £13m from this year.
This must all mean that seismic change of the kind campaigned for by the High Pay Centre and, more recently, MPs on the Business Select Committee has been achieved? Not quite. For one thing, it’s still early in the 2017 voting round; and equally importantly, the dearth of major protests so far is as much to do with the tip-toed withdrawal of controversial proposals before being tested by shareholder votes as it is any sudden attack of conscience.
Last month’s report by MPs warning that boardroom pay is broken will inevitably prompt Theresa May to take a tough post-election line on corporate governance reform.
May will gain more ammunition for her overhaul before the General Election. I suspect that Pearson, to pluck a name out of the FTSE 100, will see well over 20 per cent of shareholders opposing its pay report next month.
Its failure to link pay to performance has rightly infuriated fund managers. And a big revolt at its AGM will probably hasten the departure of John Fallon, the chief executive.
That might not quite take us back to the febrile environment of the 2012 shareholder spring, but it’s a sign that it’s way too soon for bosses to herald a newly discovered sense of self-restraint.
Who wants the Co-op Bank?
It’s up there with the City’s top pastimes right now: working out who is bidding for the Co-operative Bank?
The beleaguered lender’s frequent market updates about its sale process offers few clues about the identity of prospective suitors.
I’m told, board members want to decide in the coming days whether a viable auction is still a plausible exercise. The latest sign that a balance sheet restructuring looms is US law firm Paul Hastings being hired to advise the hedge funds which are investors in the Co-op Bank’s equity and debt.
A tough set of negotiations lies ahead. The General Election buys everyone a bit more time, but the Bank of England won’t want to get to the other side of this summer without a clear plan in place.
Pre-packs a turkey?
Is there a dirtier phrase in the City’s vocabulary right now than ‘pre-pack administration’? After the public flogging by MPs of Rutland Partners, the former backer of Bernard Matthews, that seems unlikely.
And when the cosy beneficiaries pre-packs have direct links to the original owner, the process can leave a taste for abandoned creditors as nauseating as uncooked turkey. There is an alternative narrative. According to figures obtained from KPMG, pre-packs to non-connected parties have salvaged close to 3,000 jobs since last summer.
Companies such as Ed’s Easy Diner, Jones Bootmaker and Worldstores would probably have disappeared without the ability of insolvency practitioners to organise their sale prior to falling into administration. That’s worth remembering the next time pre-packs are dismissed as another example of corporate sharp practice.