In what century did Vince Cable acquire his I-Spy primer to the financial world? The idea that the shareholders make a positive influence in the banking institutions remunerations is laughably naive. Pension or Investment Funds, Insurance Companies and Banks themselves hold the greatest majority of shares in the Gilt-Edge companies quoted on the StockMarket. They have no interest or commitment to the companies they hold shares in other than the immediate shortterm one. Will their investment make them more money than any other option? They do not have any long term concerns as to the growth and sustainable development of the companies invested in. Worse, they work in an incestuous world where their key figures are on the executive board of the major companies invested in. Nominate me and I will nominate you in turn. The scratch my back and I will scratch yours rule being first and number one rule of their closed club. So these investment institutions, the overwhelming majority shareholders, are going to police the remuneration packages of the Banks? Only to the extent of seeing who got paid what then making sure they got more when their own pay rise comes round.
Which is not to say the small individual investors cannot make an impression, as they did just few months back. Collectively they registered a minority protest vote at the remuneration packages proposed. The institutions block votes had the overwhelming majority. The 'small' investors protest vote was duly noted, their obvious concerns would be given consideration, but at the say time, it was pointed the Board was not bound by it in anyway. They had their comfortable, legal, majority.
The old model of the shareholders with an interest in and a financial commitment to the long term success of a company, collectively voting for a long, stable and secure future has gone. The investment institutions have sidelined them and institutions goals are way off the health of the company invested in. We need to tinker with the share-holding model. Only individual shareholders to be allowed to vote for remunerations, reserves, dividends and appointments to the Boards. Any shareholder with shares in excess of x,000's being required to prove that they are an individual and their address is not shared with any other share holder. That way the incestuous insider nominations will be broken together with the leap-frogging of ever higher salary deals. We might just get back to investing in companies for their survival and long term success.
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