Red Line Voting - good idea but...

The initiative from the Association of Member Nominated Trustees is a step in the right direction. But what is really needed is a way to give the real end investors, the pension fund beneficiaries, the investors in mutual funds or the clients of Private Banks a say in all votes that are held in the corporate world. Only if a conduit for them is designed will there be meaningful change in matters or corporate goverancne, ethical and social responsible investment. While it will not be possible for all individuals to vote on each and every issue and for every company whose shares are held (directly or indirectly) the solution could be to extend the role of proxy agencies. The investors should be able to select an Agency of his choice (similar to voting for a political party or politician). Agencies would be required to clearly state their voting policies and strictly adhere to them.
Red Line Voting
(11 August 2016)

Premier Foods told Nissin of US Interest

Strange things happen in Corporateland. It will be interesting to see what regulators have to say about this situation. Was Nissin an Insider after being told of potential bid interest? I guess if Joe Blogs would have been told by his girlfriend in the mailroom at Premier before quickly buying some shares the regs would have come down on him like a ton of bricks. So come on chaps at the FCA and/or PRA (wherever you hang your hats in the revolving regulatory circus) and shed some light on this. And the concerned 'fiduciaries' in the investment management firms should have a word to say as well, not least about the off-board transaction when a 'Private' Equity firm (handling the money of the wider public but keeping a hefty share for itself) got a sweet deal selling a stake to Nissin.
(30 March 2016)

Shell to buy BG for $70 billion

Headlines such as these demonstrate what is wrong with corporate governance. It may just be that keen journalists present the takeover/merger as a fait accompli - we all know that the shareholders of both companies will still be asked to approve the deal. But apart from the dubious practice of break-up fees the gist of the sentence is that this is a done deal agreed by a quasi-feudal caste of senior managers and their poodle boards over the heads of shareholders and employees. The correct way would be to consult the stakeholders from the beginning, working out the pros and cons of various options (should the del be done, why? what are the benefits) and then putting the options to a shareholder vote. Expensive consultants should be kept at bay and costs scrutinised carefully.

USS conducts member survey on SRI

The willingness of a large pension fund to conduct a survey asking its beneficiaries about their preferences with respect to socially responsible investment options is commendable. It is a step in the right direction as there is a glaring deficiency in present practices involving the management of assets, be it in pension funds, insurance companies, mutual funds or private banks (and we should not forget rapidly growing Sovereign Wealth Funds).
There is a well-documented agency problem in the management of companies with a dispersed ownership, i.e. the majority of major corporations. But there is another agency problem involving the relationship between asset managers of every form and shape and the final (real) investors whose money they are safeguarding. If anything, this latter agency problem might be of more relevance as it is directly responsible for the agency problem that can be observed in the corporate sphere.
So while a survey about SRI is welcome it is but a step in the right direction. Hopefully other fund will start to follow suit and in due course the end investors will have a major say in all aspects of corporate governance.
(9 Dec 2014)

Board should communicate more with shareholders

This suggestion by Sodali Chairman John Wilcox merits our attention. But is not a key problem that the (Chief) Executive has a major role in selecting his own supervisors? Naturally there are Board Chairman in several countries that are nominally in charge but still there is a dis-connect as the shareholders are rarely able - and/or willing - to play a major role in selecting board members. There may be a director tasked with the role of being the point of contact to shareholder queries but it is often all behind closed doors (thus creating conflicted investors that may obtain inside information). But again, without such a dialogue, how can one expect shareholders to 'engage' with the companies they invest in?
(17 Oct 2014)