by Dina Medland in London
Conflict of interest
The Patisserie Valerie saga, covered in the last Governance Watch, is the story that just keeps on giving on corporate governance.
The Chief and CFO had “second helpings of shares despite no explanation from the chain” reported the Financial Times, following up with a report about £2.9m made from bonus share schemes, and then the company’s admission that it had awarded these bonuses without informing shareholders.
Ahead of a shareholder meeting later this week, institutional investors have warned of the need for “wholesale change” at the top. “Mr Johnson, executive chairman and a 37 per cent shareholder in the company, has been warned by Glass Lewis, a proxy adviser, that if he remains on the committee it will continue to recommend that shareholders vote against his re-election as group chairman” reports The Times, under a ‘conflict of interest’ headline.
It’s a headline that has taken awhile to appear on this story. It’s everywhere – conflict of interest – and it’s the stuff that dissolves the glue of governance.
As we await the results of the Kingman Review and the future of the accounting regulator and corporate governance watchdog, the Financial Reporting Council (FRC), , Sky News has reported that Stephen Haddrill, the FRC’s CEO, is preparing to step down, possibly “before the end of the year.” There has been no comment from the FRC.
Gender, Diversity and Inclusion
There are signs that the governance focus on gender diversity is at last shifting to a broader focus on the need for a focus on inclusion, for better representation and the tapping of the best talent for business to work well in society.
An interesting story from Oslo in the FT says that Norway’s sovereign wealth fund has “delayed plans to lobby for gender balance on listed companies’ boards amid fears that it could be seen to be imposing Nordic values.”
Allegations of sexual harassment amid the enormous power of the #MeToo movement will serve to keep the issue of gender equality in the spotlight, making better gender balance a priority for any business.
In the United States, the fall-out continues with news on the departure of an Alphabet executive following the disclosure of a sexual harassment claim against him. This comes after revelations that Google has fired 48 people for sexual harassment over the last two years.
In the UK, Sir Philip Green has rejected claims of both sexual harassment and racism, saying that he is only guilty of ‘banter’. He was named- under parliamentary privilege by the former Commons leader, Lord Peter Hain - as the man who had obtained injunctions against The Telegraph newspaper preventing him being named as the businessman who was accused of abusing his employees.
Allegations involving both racial and sexual discrimination and abuse are a powerful combination that we have not seen, until recently –and they command attention.
This week there were reports in The Times and City AM that Sir Ken Olisa had engaged lawyers to sue the Institute of Directors for defamation and financial loss following his departure as deputy chairman. This comes after a public row between the IOD and its chairwoman, Lady (Barbara) Judge, over allegations of sexism and racism. Lady Judge resigned from her post at the IOD in March this year.