I have to say I was somewhat puzzled to read that Labour is urging City firms to ‘shake-up’ and calling for major shareholders to have a bigger say in appointing company boards. I previously ran a large PLC and now advise and work with companies both in the UK and the USA, and I have yet to meet one which does not take corporate governance very seriously.
Many have selected to adopt the Noland Principles and have rigorous processes for board appointments. Appreciating that the Research from the Institute for Public Policy Research (IPPR) suggests chief executives in 87 of the FTSE 100 companies took home an average of £5.1m in basic pay, bonuses, share incentives and pension contributions in 2010-11, there is no mention of the jobs or wealth creation they deliver. In my personal experience major stakeholders are fully engaged with the companies in which they invest and are active in calling the boards to account.
Instead of criticizing, perhaps we should be putting our energy into asking these leaders what role they and their organisations are going to play in turning the tide on the horrific child poverty statistics released earlier this week by the Campaign to End Child Poverty? All of the reports are highlighting that without a concerted effort this is likely to get worse and not better. The Institute for Fiscal Studies recently warned a couple with two children will be £1,250 a year worse off by 2015 as families “shoulder the burden of austerity”. It warns that tax and benefit changes outlined in the recent Autumn Statement showed the greater burden being placed on society’s poor, which “not only puts children’s well being at risk, it carries economic risks too”.
We need our business leaders to generate jobs and especially support youngsters into work offering real jobs and training. Perhaps a better focus would be to look at how they are achieving this, their strategy for job and wealth creation in the future, and what they and their colleagues are doing as part of their social commitment to their communities.
