Global Investing

Pay vote wrinkles

We don’t know the full story around Andrew Moss’ departure from Aviva on the back of a hefty protest vote from investors over his pay deal. It may well be that major shareholders made it very clear behind closed doors that they expected to see him go, with the vote acting as a public demonstration that they were serious about private demands. Perhaps the board found the advisory vote to be useful lever to remove an underperformer who had brought some troublesome baggage to the role.

But whatever the truth of the matter, the story exposes a wrinkle in the debate over executive pay.

Investors have been cast in the role of white knights as politicians and boardrooms joust over remuneration. There is a hope that this disparate posse will save us all from sky-high pay deals and the burgeoning gap between corporate leaders and their workers. But the Moss case raises questions over how effective they can be.

After all, the objection about Aviva, as is generally the case in revolts like this, was that the CEO failed to justify his pay; but the response has not been to moderate pay. The vote was about him, and not the contents of his wage packet.

Indeed, it’s difficult to imagine a situation where serious investor concerns over poor executive performance would result in a reduction in pay, rather than a goodbye kiss for the hapless CEO. It’s even harder to imagine that being repeated across the FTSE 250.

from Raw Japan:

Investing as charity

While Japan took few direct hits in the global credit crisis, the aftershocks have been immense, and long-lasting. The United States and Europe may now be showing some signs of recovery, but the world's second-largest economy is still straggling behind and gasping for air.

Predictably, equity markets reflect Japan's wheezy struggle. The Nikkei 225 is the worst performer among the benchmark indexes of the G7 nations, up just 10 percent so far this year. (The best performer, by the way, is Toronto at nearly 27 percent. The Dow has posted a respectable 17 percent return.)MARKETS-JAPAN-STOCKS

Some discrepancy between Japan and other advanced industrialised nations is to be expected. Tokyo's top companies are largely exporters reliant on the United States, where consumer spending has been whiplashed by the recession. A resurgent yen, which drives up the price of Japanese goods overseas, hasn't helped either.

from Commentaries:

Anglo’s shareholders – just waiting for more?

The Times says Anglo American shareholders have rejected rival Xstrata's merger approach.

"All of Anglo's leading institutional investors are understood to have turned down Xstrata's nil-premium merger of equals," the paper says.

No great surprise perhaps given the initial market response -- which saw the Anglo premium widen over its rival mining group.

Careful what you say

Bank executives beware. Turn your microphones off during what are likely to be stormy shareholder meetings this year.

Insults are likely to fly at many bank AGMs this year from shareholders angry at their board for losing billions, sending shares crashing, making ill-advised purchases or for their role in the global economic crisis. Bankers are unpopular after more than a year of grim news.

But an unnamed director at Santander lacked humility this week.  After heated questions from the floor about the Spanish bank’s purchase of U.S. lender Sovereign and its exposure to the alleged Bernie Madoff fraud, some shareholders applauded a critical comment.