COALITION attacks on “crony capitalism” at Britain’s top companies are flawed and based on outdated views of the composition of UK boardrooms, according to a leading advisory group.
Sarah Wilson, chief executive of proxy voting adviser Manifest, told City A.M. that David Cameron’s policy was “a big soundbite but it does not have much behind it.”
Cameron has called for the reform of remuneration committees to stop what he claimed was a “merry-go-round”, in which directors sit on each others’ boards and hand out pay rises to one another.
But research from Manifest reveals that only 52 executive directors of FTSE 100 companies, or just five per cent, hold non-executive positions at other firms on the index and only 20 of these sit on pay committees.
It also showed that where an executive from one company sits on the board of another FTSE 100 firm, there is no further crossover, because there are no instances of an executive from the second company also sitting on the board of the first. This demolishes a widely-believed myth.
Of the 1,005 directors in the 97 FTSE 100 companies surveyed, 88 per cent hold just one FTSE 100 directorship, 10 per cent hold two and just two per cent hold three or four. “What shareholders do want are claw-backs and they want binding votes in place but on directors’ share plans,” Wilson said.
