Fund manager Fidelity is forcing Michael Green out of the merging Carlton/Granada.
Fidelity’s success in wielding the power of its shareholder voting rights to oust Michael Green from the merging Carlton [CCM.L]/Granada [GME.L] may be the first of many such cases. A whole host of flashpoints could arise as questions are asked about the senior management of the country’s top firms. Now that they have tasted victory, UK fund managers and life and pensions companies could really start to throw their weight around.
A new standoff is already looming over the potential succession of James Murdoch to the CEO role at broadcaster BskyB [BSY.L]. Shareholders want to know whether his loyalty would lie with the company or its major shareholder NewsCorp [NWS], the Murdoch family business. The ABI has sent out a ‘red-top’, symbolizing a high state of alarm at this potential conflict of interest, to its members. BskyB’s shareholders include some of the most revered life and pensions companies in the UK, amongst them Scottish Widows, Prudential [PRU.L] and Abbey [ANL.L].
The increasing activism of shareholders represents an encouraging move in UK share ownership. It is an acknowledgement of shareholders’ right to influence the decision making process and drive a company forward from within. The link between shareholder opinion and the decision on who is appointed to run a company is clear and unquestionable, thus some CEOs may suddenly find themselves in precarious positions, fearing they too will be shown the door if they make a mistake. Even the most successful captains of industry will be wondering how much further this activism is likely to go, and into what other areas the shareholders may insist on interfering.
However, while shareholder interest and influence in the broad direction of a company is to be applauded, holding too much sway on every issue that is put to the vote would see the decision-making process of many companies hamstrung by over-scrutiny.
