The Shareholder Spring. Nice idea but will it turn into glorious summer?

May 23, 2012

Successful attempts by shareholders to restrict executive bonuses have been hailed as the outbreak of a Shareholder Spring. But, like the Arab Spring, summer may be a long way away

According to City A.M., the media group UBM has been the latest organization to experience a Shareholder Spring.

More than 47 per cent of investors failed to back the directors’ remuneration report, a result that would have been considered extraordinary before a recent spate of shareholder rebellions against pay levels at underperforming firms.

Protests focused on the substantial share option given to UBM’s finance director Robert Gray and a change in rules that meant performance-related bonuses would no longer take retail price inflation into account – possibly making it easier for executives to hit targets.

A spokesman for the firm said: “The Board has a continuing commitment to a process of active engagement with Shareholders and takes careful note of the lower percentage majority in favour of the Remuneration report. UBM’s executive remuneration policy is designed to reward and incentivise its senior management appropriately for an increasingly successful, growing and global company.”

Shareholder anger

Also in the UK, Aviva, Pendragon and Trinity Mirror have been corporations which have all faced the displeasure of shareholders.

Erika Morphy, writing for Forbes on leadership and its financial dilemmas, explores the Shareholder Spring through events at Yahoo

She suggests that shareholder pressures have been influenced through financial reforms in the United States such as the Dodd Franks legislation.

The so-called Shareholder Spring explains events at AOL, at Citigroup, which recently got its outstretched hand smacked by shareholders over a $15 million pay package for its CEO, Vikram Pandit, and at Credit Suisse and Barclays, which also received rejection by shareholders on compensation.
“Most famously, the Shareholder Spring has claimed Yahoo’s CEO Thompson’s head, if reports are true” she notes.

While recognising some victories for shareholders, Morphy concludes that “For the most part, companies are still firmly in control of their shareholders. Thompson is an exception, undone by a tin ear and flat-out stupidity in the way he marketed his credentials”

Leaders We Deserve has followed events at Yahoo since the controversial sacking of Carole Bartz a year ago [April 2011] which led to a temporary surge in its share price. Ms Bartz had taken over from Yahoo co-founder Jerry Yan in 2009.

Government plans do not convince

In the UK, the so-called events of Shareholder Spring seems more potent than those in the United States. The greater activity and pressure from large shareholders may demonstrate lack of conviction that government intervention through Vince Cable will be enough to address investor concerns. These reforms were mentioned in the forthcoming government plans last week.

The darling buds of May

The Arab Spring of 2011 is turning out to be not so much a tipping point, as a complex series of unresolved tensions throughout the Middle East. The Shareholder Spring may in that respect share some of its complexities.


Now is the Winter of our Discontent Button by ObsessionDesign, zazzle,