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Tim Martin at JD Wetherspoon writes some entertaining chairman’s rants and, if you skip the sermons on Brexit, he is reliably thought-provoking. Here’s the latest view from behind the pumps: corporate governance in the UK is “up the spout” and a tick-box culture is sowing seeds of destruction.
As a catch-all statement, the judgment is absurdly severe. If you think governance codes don’t always produce ideal outcomes, look at the abuses that happen in their absence. Nobody, surely, wants to return to the days of three-year rolling contracts for executive directors, signed off by nodding non-executives who routinely stayed so long they became part of the furniture.
The UK governance code’s recommendation that non-executives should serve no more than nine years sounds roughly correct, whatever Martin thinks. Boardrooms require fresh air to encourage free thinking. And the expectation that “a chief executive should not go on to be chairman of the same company” exists for sound reasons. There are dangers in investing too much power in one individual, as the US corporate scene demonstrates often (WeWork, Boeing, etc).
Yet one can sympathise with a couple of Martin’s points. First, it must be irritating to be criticised by Columbia Threadneedle, the fund manager that controls 16% of Wetherspoon, over the nine-year rule. Columbia’s corporate parent, the US group Ameriprise, he says, contains a duo that would be regarded as past their sell-by date by UK standards. It’s fair to point a finger in the other direction.
Martin’s second point – the critical one – is that “one-size-fits-all does not work in the real world”. Yes, biodiversity is important in the corporate jungle and Wetherspoon can make a decent plea that it’s different.
Martin owns 32% of shares but doesn’t indulge in wild acquisition sprees in the style of Mike Ashley. Also, unlike Sports Direct, Wetherspoon has performed supremely well for shareholders. Part of the reason may be what Martin calls the company’s DNA. So, yes, trying to impose conventional structures on an unusual company is not necessarily wise. The “explain” part of the code’s “comply or explain” philosophy also matters.
Martin’s musings may be prompted by his worry about what will happen to Wetherspoon after his retirement. He’s 65 and not the dynastic type. One can see why he wouldn’t want the boardroom to be invaded by outside box-tickers, as he would see it.
But he could help himself on this score. As he rightly says, workers are “absurdly underrepresented” in boardrooms. He could try appointing a couple of staff to sustain the Spoons DNA. There is nothing in the code to stop him.
Royal Mail strike injunction delivers good news for Labour
Good news for the Labour party: the threatened mid-election strike at the Royal Mail is off. The company won an injunction on Wednesday preventing immediate industrial action by successfully arguing there were “irregularities” in a ballot that requires trade union members to vote in private at home rather than at work.
The risk for Labour was that a strike could have become politicised, allowing the Tories to make mischievous claims about a return to the 1970s. Voters might have sided with the postal workers, but Jeremy Corbyn and John McDonnell would surely prefer to talk about something else in late November.
The court decision, though, is definitively a blow for the Communication Workers Union (CWU), which organised the ballot. The threatened pre-Christmas timing was meant to maximise leverage in a dispute over pay and employment conditions. That timeframe is now in jeopardy even if the union successfully appeals or re-ballots.
But this is now two courtroom defeats in a row. In the last episode, in 2017, the CWU was told its proposed industrial action was unlawful because the mediation process had not been exhausted. One might not like the trade union act, but a 2-0 defeat, assuming Wednesday’s judgment sticks, is not a good look for the CWU’s lawyers.
Unilever chairman leaves after only three years at helm
Marijn Dekkers, Unilever’s departing chairman, could not have complained if he had been given the heave-ho after the farcical attempt last year to move the company’s headquarters to the Netherlands.
The Rotterdam rumpus may have been inspired by Paul Polman, the chief executive at the time, but the chairman’s job is to stop these showdowns before they become embarrassing. Shareholders in the UK revolted, predictably, and Unilever was forced into a U-turn, with only a large legal bill to show.
As it is, Dekkers is leaving the chairman’s seat after only three years but is easing into a regular non-executive berth at Unilever. He needs to devote more time to his investment and advisory firm. How neat.
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