The 'shareholder spring' and relational responsibilities

Quote
‘But experience is accumulating that remoteness between ownership and operation is an evil in the relations between men, likely or certain in the long run to set up strains and enmities which will bring to nought the financial calculation.’  John Maynard Keynes, 1933.

News
The latest skirmish in the ‘shareholder spring’ was on Wednesday at WPP, the world’s largest advertising company, when 59% of shareholders voted against the proposed rise in Sir Martin Sorrell’s pay package.

The movement is shifting the focus of anger and injustice expressed by the Occupy movement from the streets – where it can be ignored – to the company’s AGM – where it cannot.  Is this a passing protest movement, or does it have the potential to reform the corporate world?
 

There is a glimmer of hope that campaign for responsible investment is beginning to change the ‘absentee landlord’ approach to owning companies, which has allowed all kinds of excesses to develop unchecked.  The focus now is on reining in executive pay, but to bring a deeper transformation, it needs to grapple with the tougher root and branch reforms of issues like long and unsocial working hours, squeezing suppliers through late payments, and the bonus culture.
 

When it comes to tackling the flaws of 21st century Capitalism, the ‘shareholder spring’ is adding bite to the bark of protests about spiralling inequality in companies.  Such inequality is a deep-seated malaise that demotivates staff, divides communities and demoralises wider society.  Secondly, the active involvement of individual shareholders at AGMs is reducing the relational distance between the ultimate owners of companies – individual capital providers – and the directors who run them.  
 

So the ‘shareholder spring’ is tackling two major ethical dilemmas at heart of modern Capitalism: unfairness, and irresponsibility of shareholders. Let us see if it can live up to its potential and become a force for relational renewal.
 

Read on
Chapter two of Transforming Capitalism from Within, the landmark report by Jonathan Rushworth and Michael Schluter, explains how limited liability company structure has led to both shareholders and directors working against the long term interests of the company.  Look up the report here.

Walk the talk
Do you know where your money is actually going in your savings or pension, if you have one?  You are likely a capital provider to a number of companies.  Why not ask your bank or pension adviser to tell you which companies you have ownership in, and find out about their practices?

The last word
From the Bible, Luke 19 verse 22: “His master replied, 'I will judge you by your own words, you wicked servant! You knew, did you, that I am a hard man, taking out what I did not put in, and reaping what I did not sow?’”