Advisers go overboard about overboarding, Royal Mail goes back to the future and will Susan Kilsby become the new Barclays chair?

 
Mark Kleinman
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What links Paul Walsh, Sir Nigel Rudd and Vagn Sorensen? Other than chairing three of the London market’s blue-chip companies (Compass Group, Meggitt and SSP respectively), this illustrious trio have found themselves in the cross-hairs of proxy advisers over their portfolios of boardroom roles.

Both Rudd and Sorensen have suffered bruising rebellions, while Walsh decided to step down from HSBC Holdings’ board last year to avoid what would presumably have been a similar result.

The backlash against overboarding has its roots in a sensible sentiment: investors’ concern that directors of multiple companies may have insufficient time to devote if crisis strikes.

The chairman of a globally systemically important bank, for example, would be over-trading if they also held the same role at a major oil company.

Some of the voting recommendations during the current AGM season, though, have left common sense at the door.

The 32 per cent rebellion against Sir Nigel, for example, was on a scale that would imply overwhelming investor dissatisfaction with Meggitt’s performance, or a damaging row over the chief executive’s pay.

Neither has been the case.

Read more: Fresh wave of shareholder protests set to hit FTSE firms

And whether or not you agree with WPP Group’s decision not to disclose the reasons behind Sir Martin Sorrell’s exit, it’s fanciful to suggest that chairman Roberto Quarta’s judgement has been impaired because he has been distracted by his other major role on the board of Smith & Nephew.

They’re not the only ones under fire. Institutional Shareholder Services, one of the main proxy advisers, targeted Foxtons chairman Garry Watts at yesterday’s AGM, where 15.99 per cent of investors opposed his re-election.

The agencies’ approach is too prescriptive. As this week’s joint select committee report vividly demonstrated, there was little evidence of director overboarding at Carillion – but there was plenty of evidence of wilful blindness and a half-hearted effort by directors to hold executives to account.

Ultimately, directors with a strong track record of delivering for shareholders should be allowed to get on with fulfilling their fiduciary obligations – not be constantly looking over their shoulder to see if a corporate nanny-state is catching up with them.

Kilsby for Barclays?

From overboarding to underboarding. Susan Kilsby, the chairman of Shire, faces a long slog to seeing through the drugs company’s takeover by Japan’s Takeda. When she does, expect her to be in demand.

My money would be on Kilsby, a non-executive director at Goldman Sachs International, being in the mix to become Barclays’ next chairman.

Read more: A UK bank has held on to the title of Europe's largest

The timing might work. Shire’s takeover by Takeda will take the best part of a year to complete, and outgoing chairman John McFarlane has made it clear that he won’t be leaving Barclays until at least the 2019 AGM.

Kilsby has the right experience to get a grip of Barclays’ perennially underperforming investment bank, and she knows the City well.

I have a hunch that she could be a dark horse in the process.

Back to the future

How’s this for transparency?

A FTSE-100 company which was state-owned until 2013 announces pay arrangements for its new chief executive but fails to mention that it handed him a one-off award worth nearly £6m nine months earlier.

Perhaps Royal Mail’s explanation of the payment to Rico Back got lost in the post.

I understand that the decision not to reveal the sum until its annual report is published caused enormous consternation in the postal operator’s boardroom.

Read more: Letters division drags on Royal Mail

It may, therefore, not be too much of a conspiracy theory to point out that the wording of its 20 April statement about Moya Greene’s departure (in which she “agreed that she will retire in September”) was eerily similar to the one which presaged last year’s row at the London Stock Exchange Group about Xavier Rolet. (Where’s TCI’s Sir Christopher Hohn when you need him?).

Sources say that Greene, who has arguably been underpaid throughout her Royal Mail tenure, and chairman Peter Long did not see eye-to-eye about the handling of Back’s £5.8m payday.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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