Unstructured Finance

Montagnon jumps ship to FRC

Change at the top among the UK corporate governance elite.

Peter Montagnon, the cheerleader-in-chief for UK investors is leaving the ABI to take up a new position at the FRC, the corporate governance policeman.  Montagnon, who has spent ten years at the Association of British Insurers, is taking up his new appointment at a critical juncture for corporate governance in the UK industry.

Accused by critics of being comatose through most of the credit crisis, UK shareholders have started flexing their muscles by openly opposing company boards on key issues.  They are now working towards tackling company boards under the auspices of a new improved Institutional Shareholders Committee. You can read the story here.

At the Financial Reporting Council, Montagnon – a former Reuters journalist - will provide “perspective and input” into the development of the UK coroporate governance code and the new stewardship code for UK investors. The stewardship code was recommended by City grandee David Walker in his report on strengthening corporate governance in the UK last year.

Montagnon’s appointment at the FRC looks like yet another step in bolstering the  governance body as it steps up pressure on investors and boards alike.

Investors to gang up on company boards

Britain’s largest investors are gearing up to take on troublesome boards. A new body will look at addressing investor concerns over some of the most contentious issues of the day, mainly pay and strategy. You can read the story here

This kind of collective action by UK’s biggest investors is exactly the kind of thing needed to make companies to sit up and take notice of  their views. After being ravaged by the credit crisis, companies have been forced to go, cap-in-hand, to investors for fresh capital injections, forcing them to at least listen to what their biggest shareholders are saying.

This is in stark contrast to the stance taken by some companies in the run up to the crisis. Last year, the IMA revealed that 21 fund firms had a total of 59 separate meetings with RBS over the roles of the chairman and CEO. And even a push from one of its its largest investor Legal & General Investment Management had little effect. The duo did not step down until after the government was forced to bail out the bank in October 2008.