Okay he didn’t quite say this but here is a great post by Tom P about the “suggestion” by Labour Treasury Minister, Paul Myners, that trade unions should be involved in the decision making by company remuneration committees. As Tom puts it - a trade union rep would not have agreed to Fred Godwin’s unreduced early pension package (even in the unlikely event he was a union member!)The real underlying issue is of course about the principle of “ownership”. Fund managers have a fiduciary duty to their companies and shareholders - not to the pension funds who employ them. Yes, in theory they have contractual and regulatory obligations. Experience has shown us that the vast majority of fund managers care only for short term profits and have not been interested in the long term harm that their investments can cause to the wider economy. Their mandates are typically 3 years at best not 30.
Pension funds were also beaten up last week by the UN PRI who call for investors to take the blame for the credit crisis and take responsibility for fixing it.
Last week I attended a well attended London UNISON briefing on Capital Stewardship and governance in the Local Government Pension Scheme (LGPS). Nearly all the London schemes were represented. National Officer, Colin Meech briefed everyone on far reaching legal developments and the ambitious UNISON rolling training and support programme for pension representatives.
The total value of London schemes alone was (31.3.07!) £21.25 Billion. Now a lot less but still a huge amount of money. Yet in most schemes there was no effective scrutiny whatsoever of fund managers about their voting decisions at company AGMs. Pension funds “voted” to approve the appointments of the Bank Executives and their toxic remuneration packages that brought the British Banking system close to a collapse. We the Turkeys actually paid so-called experts to vote on our behalf for Christmas? This must never be allowed to happen again.
It’s about time the real long term owners of capital were allowed to start taking more responsibility for their savings. We are saving for our pensions for up to 40 years and on average pensioners live another 15 years on top that. So we at least have no interest in short term profits that can damage the fund in the long term.
So maybe a new trade union pension slogan to the City should be “No Remuneration without Representation”
2 comments:
Looks like a positive development. I like the idea of tying pay at the top to average rates of pay within companies - so there's a disincentive to erode wages - called the maximum wage. This would be no doubt something unions would push if granted a place in the boardroom.
In a sense we need to "go back to the 1970s" when the Bullock report was published but never implemented on worker participation in company boardrooms - it recommended IIRC that union representatives be included
Hi Charlie
We need to rebalance the way we do things. Managing Risk is now key since we have seen what happens if we don't do this properly.
You can't manage risk if you don't have balance. Trained and supported union reps and board members will provide this counterbalance. Who else can do this?
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