Wednesday, December 5

Corporate Governance by the open-toed sandal brigade

Now this was very amusing. The Chairman of Guardian Group and Land Securities and , and ex chairman of Marks and Spencer and Gartmore (some doughty members of the British Corporate World) is moaning about the fact that the open-toed sandal brigade is thinking purely on board structure and pay while fund managers dont really care.

I quote:

Mr Myners said portfolio managers who make investment decisions often seemed at odds with corporate governance specialists. “I frequently find when I talk to institutional investors that the portfolio manager, who I regard as the owner of the shares of the company on whose board I sit, is very content with what we are doing, but there’s somebody in the basement who is responsible for governance who has got an issue, and there’s a dislocation between the two.”

His criticisms echo those made this year by company directors, notably Terry Smith, chairman of Collins Stewart, and comments made in April by Sir Christopher Hogg, chairman of the Financial Reporting Council, which monitors the combined code. Sir Christopher admitted to concerns that fund managers regarded the job of monitoring governance as a “costly, distracting and irrelevant chore”.

I personally think this is wrong. Whether or not you are a fund manager, it does not matter. You are a shareholder or a shareholder representative. And you have to take your stance on corporate governance. And for you to say that its, "costly, distracting and irrelevant chore" simply means that you are abdicating your responsibility to make sure that you as the owner makes sure that the management are delivering value. But if you simply pick and choose, leap from one firm to another, then you arent really a shareholder, are you? You are simply a locust. And I use the word with due reason.

This is why I hate the word "activist investors". So looking after my money is not being active? What kind of stupidity is that? passive investors have another name, they are called as "idiot investors" or "investors who are looking to get fleeced".

So I disagree with Mr. Myners on one small aspect but the fact that there is a disconnect is a worry.

Read and Think

All this to be taken with a grain of piquant salt!!!

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