EVEN before the phrase “shareholder spring” was uttered, it was clear that investors were becoming unruly. More often than not it was strategy rather than executive remuneration that caused discontent. Much of the recent unrest, ostensibly about pay, is really about direction. Andrew Moss, the former Aviva boss, could have paid himself £1 last year and shareholders would still have wanted his scalp. As with Sly Bailey, the ousted Trinity Mirror CEO, they didn't think she was up to scratch.
Yesterday, G4S chief executive Nick Buckles described his own mauling over the company’s £5.2bn bid for Danish cleaning giant ISS last year as a “shareholder autumn”. In the end, the company’s annual meeting passed uneventfully yesterday, but G4S has already paid a heavy price. Its chairman walked the plank after the ISS deal was aborted while Buckles waived his £750,000 bonus.
In the current climate, few chief executives are brave enough to attempt the kind of transformational takeover that almost cost Buckles his job. Such deals have been fraught with risk ever since Prudential chief executive Tidjane Thiam abandoned his £24.6bn bid for AIA.
Those transformational deals that did get through have ended in disaster more often than not. HP’s acquisition of Autonomy for £7bn last year is looking more and more ill-judged as the days go by. Its share price has plunged and its chief executive Léo Apotheker has paid the ultimate price. Last month Autonomy boss Mike Lynch followed him out the door, after HP complained of disappointing revenues at its expensive new buy.
Glencore and Xstrata might want to pay attention. Their £60bn tie-up has never been particularly popular with the institutions that own Xstrata, and is even less so following the ridiculous £240m of golden handcuff deals that chief executive Mick Davis and others will get if the merger goes through. It is almost as though Davis et al are oblivious to the winds of change that are sweeping though boardrooms around the world. They ignore them at their peril.
The shareholder spring also appears to have passed Sir Martin Sorrell by, despite his self-styled reputation as a man of the zeitgeist. Regardless of whether Sir Martin deserves his dough, it is impossible to claim that a 30 per cent rise in base salary can be closely tied to performance. His swashbuckling attempt to defend himself has only made things worse. He might describe himself as an owner, but with just two per cent of the shares he is anything but. The real owners deserve more respect.
Some executives might believe that the shareholder spring will, like the season, end at the close of June. They had better think again.