Vindico lays in to Trade Union-twat Barber, here.
Actually, BB's summary of the reasons for runaway boardrooom pay is pretty accurate:
"institutional shareholders should remember that they are looking after the savings of millions of ordinary employees, not setting the pay of their city chums".
This is easily fixed. End tax breaks for pensions, pension funds, unit trusts and other 'institutional investors' and/or reduce taxes on direct shareholdings (higher rate tax, Stamp Duty, Capital Gains Tax)*. That will lead to there being more small, private shareholders, who are far less likely to nod through** these fairly outrageous pay rises for crap directors.
There, no extra rules and regulations required, in fact no extra rules at all, it's more a question of getting rid of all the rules that gave rise to these 'institutional investors' in the first place. The fewer rules the better.
* Preferably both, of course.
** s318 Companies Act 1985, directors' service contracts have to be open to inspection by members. s303, members can sack a director by simple majority, regardless of his contract of employment. Most quoted plc's actually have a vote on the directors' total remuneration package, but this does not appear to be in the Act. Perhaps it's a Stock Exchange requirement?
Tuesday, 30 October 2007
Brendan Barber might have a point
Subscribe to:
Post Comments (Atom)
4 comments:
One rule, perhaps, unless it already exists. The shareholders' AGM must vote on all directors' salaries, fees and perks.
That rule already does exist, AFAIAA, see sections 311 ff of Companies Act 1985.
The original post was sort of predicated on there being such a rule.
I do see one problem, Mark. Your scheme might make it theoretically easier for samll investors to enter the stock market but there are a couple of other barriers:
Firstly most people's only exposure to these markets is via their pension funds. Usually they are forced to join these by their employers.
And even if they do wish to become investors beyond their pension schemes, many people are either too scared or too lazy to manage their portfolios. They tend to use unit trusts as a less stressful alternative.
Personally I invest in property because I can't be arsed to keep track of stocks and shares. Which reminds me. Christmas is coming up and I have a couple of widows as tennants. Where did I put those eviction notices? Boohoohaahaa!
they are forced to join
Well, that's another set of rules that will go out of the window!
Post a Comment