ALEX BRUMMER: Good governance in corporate life is far off


ALEX BRUMMER: The fight for good governance and better value systems in corporate life has a long way to go

Founding a new enterprise is hard. The start-up generation has had a real chance to lift the bar when it comes to looking after the interests of employees. 

Similarly, it might have been hoped that Covid-19, the suffering of so many, and the push for environmental, social and governance investing by Blackrock among others, might have produced a real change in boardroom behaviour. 

Instead, we have seen unfettered greed, with bosses lobbying for, and accepting, big pay increases when restraint and responsibility are in order. 

Among newer enterprises, think about craft brewing. The name itself exhibits a point of difference with the established industrial-scale beerage. There, the conformity of the product and logistics play second fiddle to the quality of hops. 

Sinking feeling: It might have been hoped that Covid-19 might have produced a real change in boardroom behaviour

Brewdog is one of the more successful of the craft breed and tapped into respect for what it does by crowdfunding. So it comes as a shock when former workers take to Twitter exposing a record of cutting corners on health and safety and driving staff so hard that it has caused mental illness. 

Uber had to be dragged through the UK courts to be persuaded that its drivers in the UK should be offered the same employment rights as payroll employees. 

The lack of formal employment conditions for riders was among the factors that led to a stock market flop of Deliveroo. Instead of resetting the dial for workers, some millennial and GenZ firms seem to have feeble grasp of what a company built for all stakeholders might look like. 

It doesn’t help that bigger firms set a bad example. Dismal conditions in Sports Direct and Amazon warehouses have been widely reported. Tesco fought an equal pay claim for women to the highest court in Europe and lost. Its former chief executive, Dave Lewis, waltzed off with a £6.42m pay and bonus package during the pandemic. 

Shareholders in rival Morrisons this week handed chief executive Dave Potts and his team bloody noses, with 70 per cent voting against the group’s pay report. It has been a year of executive pay revolts at companies as different as Rio Tinto and publisher Informa. 

Supermarkets were among the pandemic heroes, keeping people supplied. That is no excuse for ‘wartime’ profiteering. Investors at Morrisons were disturbed that the pay committee failed to adjust bonuses to account for windfall income as a result of hospitality and other closures. 

Fat cat pay is no accident. It arises as a result of weak remuneration committees, grasping executives with no sense of personal shame and lack of responsibility and poor advice from remuneration experts who are often conflicted. The fight for good governance and better value systems in corporate life has a long way to go.

Trading places 

Post-Brexit Britain’s trade figures have become a new battleground for those who thought leaving the EU was a dreadful mistake. With each passing month the pattern becomes clearer. 

Trade with countries outside the EU is buoyant with imports up 4.9 per cent since December and exports off just 1.3 per cent. Trade with Europe is being hit hard. 

The UK, by all accounts, is getting the best of the bargain with exports down 5.7 per cent and imports falling by a whopping 19.1 per cent. 

The figures are distorted by pandemic effects and the relatively slow recovery in the eurozone. In spite of border disputes and EU use of non-tariff barriers, such as intrusive document requests, living outside the EU is not the disaster predicted.

Private grief 

At least fund management outsourcer Sanne did not capitulate at the first sound of private equity cannon fire. 

By holding firm, chairman Rupert Robson, an HSBC emigre, has elicited five improved offers and only succumbed to talks when the offer from Cinven hit 875p, valuing the group at £1.42m. The final outcome will be the same. A valuable UK financial enterprise with good tech vanishing into the private equity black box. 

There is a symmetry to Jersey-based Sanne’s fate. Before its London listing in 2015, it was owned by private equity outfit Inflexion. Much of its income derives from offering the private equity sector fiduciary, administration and governance services. 

Private equity takeovers should never just be about price. 

Unless a compelling and ambitious business case can be made, the directors have a duty to kick the offer into touch. 



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