By Alex Brummer
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Forced to go: AstraZeneca's David Brennan has been hounded out of office
Whichever way you look at it, it has been a momentous few days for shareholder activism. Two powerful chief executives, David Brennan at AstraZeneca and Trinity Mirror’s Sly Bailey, have been hounded out of office and another, Andrew Moss of Aviva, is teetering on the edge.
Bob Diamond of Barclays has been repudiated, the job of Man Group chief executive Peter Clarke is hanging by a gossamer thread and serial non- executive Alison Carnwath has managed the singular achievement of alienating not one but two groups of investors.
It is hard to identify what exactly the normally docile big battalion investors have stirred into their tea but finally they are on the right track. Some credit for what is going on, particularly in the United States where there have been revolts at Citigroup, the New York Stock Exchange and Goldman Sachs, has to be given to the impact of the ‘Occupy’ movement.
A bunch of unshaven, muddled dissenters may seem an unlikely source of revolution in the boardroom. But by highlighting the micro-climate in which the fat cats live, and exposing social inequality in an age of austerity, they helped to move the debate from bland meeting rooms into the public eye.
There is more to come. It is hard to believe that investors in Centrica will not have qualms about the bonuses and pay levels at the power company and serial sinners â€" like Sir Martin Sorrell of WPP â€" have yet to face the music.
It is highly satisfying that finally reality is catching up with rapacious directors, useless pay committees stuffed with cosy back scratchers and pay consultants who think they have a divine right to dream up ever more clever ways of fleecing investors.
But the likelihood is the passion will diminish over time unless the rules are tightened.
That is why Vince Cable’s review is so important, including the possibility pay votes become mandatory, enforceable in law, rather than advisory.
Directors’ pay in FTSE100 firms now stands at an astonishing 262 times the wages of those at the bottom of the income scale.
It is far too early to call off the attack dogs.
Credit pain
Given the current acrimony over pay it is just as well that Stephen Hester, chief executive of Royal Bank of Scotland, chose to waive last year’s bonus. The bank is making strides in paying back government emergency support, but it is a long way from being free from taxpayer ownership.
Aside from all of its other problems, the bill for wrongful selling of payment protection insurance has climbed another £125m and Ulster bank remains a serious problem.
There is also a sleight of hand in presentation of the results. The bank says the first quarter loss was due to narrowing spread on its own debt.
That is fine but RBS was only too happy to claim the profits from wider spreads in different times.
Hester will have to take the Bank a long way if it is ever to escape government control.
The longer the time frame becomes, the more attractive the option of selling off the good parts, Direct Line, NatWest, Citizens and putting the rest of the bank into run-off becomes.
What is certain is that regulatory requirements to conserve capital means RBS will continue to struggle to satisfy the credit needs of households and small businesses.
Zuckerberg factor
Much excitement in the last 48 hours about the Facebook float, which would raise £8.3bn of new money and value the social networking giant at up to £60bn.
When Google floated just under a decade ago I was highly sceptical about its prospects because of the overhang of lawsuits from content providers. We now know who won that battle!
At Facebook the questions are about Mark Zuckerberg’s mania for control, the high price paid for Instagram and whether the ecosystem around Facebook, companies such as Zynga, can wean themselves off. All of which are big questions.
But after looking at the way the values of the big digital floats ballooned, institutional investors may wonder if they can afford to stay on the sidelines.
Chinese burn
How short memories can be. The takeover of Weetabix by Chinese state-owned Bright Foods has been hailed in some quarters as a brilliant deal. It certainly is for managers of private equity group Lion Capital.
But it is also worth recalling that Bright Foods does not have the best of reputations for food hygiene.
In 2008 sales of its best known consumer brand White Rabbit candy had to be halted after it was discovered the milk used allegedly had been contaminated by the industrial chemical melamine.
Nice.
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