Rensburg AIM VCT Merger Agreed

Today (27/11/2015) shareholders in Rensburg AIM VCT (RSB) agreed to merge their company with Unicorn AIM VCT in a unanimous show of hands vote. They also agreed the tender offer which was associated with the deal and those shareholders who submitted tenders will be paid in full. Proxy votes were about 92% in favour on both resolutions.

This is a definitive snub to Bill Nixon  of Maven who attempted to disrupt these plans on the basis that he could make a more attractive offer. Clearly neither the current directors, nor shareholders, were convinced. ShareSoc recommended shareholders vote in favour of the merger as it appeared to provide a satisfactory resolution to what has been a long running saga of problems at this company.

ShareSoc initially ran a campaign to improve the performance of the company and change the management fee arrangements (see ). Then when the company had run down to an unviable size, we opposed the wind-up suggested by the directors – many shareholders would have been affected by capital gains roll-backs.

This is the second victory for shareholder activism today (the first one was at Alliance Trust) and for the activities of ShareSoc in promoting the interests of private shareholders.

Roger Lawson

Alliance Trust Director Steps Down

It was announced this morning (27/11/2015) that Karin Forseke, Chair of Alliance Trust, will step down in January 2016. Gregor Stewart will take over as Chairman. Alliance Trust has been the focus of campaigns by Elliott Advisors and ShareSoc to get some changes made to this company so as to improve its performance (see ) .

Although the company has recently announced some changes, and has been furiously buying back shares – presumably in an attempt to close the discount to NAV, there are still concerns about the structure of this company and the continuing high discount.

Now it just so happens that I personally asked the somewhat rhetorical question at the last AGM of this company in the Spring whether she had considered resigning. She ducked the question at the time but it did seem to me that this company needed a much more forceful Chairperson to counter the dominance of the CEO, Katherine Garrett-Cox. In addition there needed to be some tough decisions taken and quickly whereas Ms Forseke adopted a more consensual Swedish management style.
So one cannot but welcome this change at the top of Alliance Trust, and it is of course a good example of how shareholder activism can have a positive and substantial impact.

Roger Lawson

The Truth about Executive Pay

The Financial Times has today published some extraordinarily revealing comments made by new Deutsche Bank CEO John Cryan:

“I have no idea why I was offered a contract with a bonus in it because I promise you I will not work any harder or any less hard in any year, in any day because someone is going to pay me more or less,” he told a conference in Frankfurt.

Pay in the sector was still too high, he added, and he did not “fully empathise” with people who “say they turn up to work and work harder because they can be paid a little bit more”.

“I’ve never been able to understand the way additional excess riches drive people to behave differently.”

This is nothing new, and similar comments were made Shell CEO Jeroen van der Veer some years ago.

When a CEO already receives a base salary & benefits representing more than 20x that of their company’s median paid employee (which is often the case), are shareholders not entitled to expect that that CEO will work to the best of his or her ability, and not just a minimum of contracted hours? Is it really necessary to “incentivise” them with potential multiples of that already high base salary in opaque bonus and LTIP schemes in order to obtain best performance?

Is an individual whose primary concern is their own enrichment likely to be the best candidate for a CEO role?

The answers to these questions are transparently obvious to me. I raised the matter of outrageous pay at BG Group’s last AGM, where newly appointed CEO Helge Lund had been awarded a truly enormous package of pay & bonuses, far in excess of those offered by his previous employer, Statoil. I got the usual response from the chair of BG’s remuneration committee that they had to pay competitively to attract the best talent. I also spoke to Mr Lund after the formal meeting and he confirmed to me that pay was not his primary motivation for accepting the BG role, but rather that he relished the challenge of leading a world class company which faced challenges and needed new strategic and operational direction.

It is time for shareholders (both individual and institutional) to stand up and be counted: vote against pay policies that can result in bonus and LTIP awards worth multiples of base salaries and against the re-election of remuneration committee chairmen that propose such policies.

ShareSoc has formed a committee to look into these matters and draft a pay policy report. Do let us have your views, by commenting on this post, or emailing our office via the link on our contact page.

Mark Bentley


Jim Slater – Obituary

Well known stock market investor and “asset stripper” Jim Slater has died aged 86. He first made a big name for himself as co-founder of Slater-Walker Securities in the 1960s – an investment company that specialised in rapid deal making. By acquiring companies, reorganising them and then disposing of them the company grew rapidly but built a reputation for “asset stripping” (a derogatory term for taking out the good parts of a business and dismantling the rest leaving workers out of jobs). It eventually ran into financial difficulties in the mid-70s leaving Slater a “minus millionaire” as he put it.

He trained as an accountant and wrote an investment column for the Sunday Telegraph before the above activities, but his main claim to fame among private investors will be the book he published on stock market investment entitled “The Zulu Principle”. The title was chosen because he argued you could become more expert on Zulus than anyone else with just a little study suggesting that a focused approach to investment would be most productive. But the book really became popular from its promotion of the PEG (Price Earning Growth) factor as a more appropriate way to value rapidly growing businesses. Earnings that are growing rapidly are more valuable then those that are growing slowly so by dividing the Price/Earnings ratio by the growth factor you get a better measure to compare companies.

He was keen on investing in growing business, and I was amused to spot when I retrieved my original copy of The Zulu Principle that in 1968 Tesco was on a p/e of 43 from which it subsequently declined sharply after supermarkets became more commonplace. That and his other investment books are still well worth reading.

He subsequently wrote some children’s stories and an autobiography called Return to Go. One of his sons, Mark Slater, is also active in the investment world as a fund manager where he follows his father’s investment style with success.

Roger Lawson

The HBOS Report – It’s Finally Here

The Prudential Regulatory Authority and the Bank of England today published the report of the inquiry into the failure of HBOS Plc. Those who were investors in the company at the time, or who suffered as a consequence of the bail-out of the company via a merger with LloydsTSB, will not need to be told what happened and why. This report does not add a lot to the story as the defects in the management of the HBOS are now well known.

To quote from this report: “The Board failed to identify the extent to which HBOS was moving up the risk curve” and it notes how the collapse of Lehman Bros undermined its funding options and the “material outflows of customer deposits” resulted in an unexpected funding need of £12.5 billion a week later. The aggressive growth strategy, poor quality assets and reliance on wholesale funding come into criticism as expected.

Peter Cummings, who led the charge into high risk commercial property lending, was the only former executive to have been penalised and the report does question why no action was taken against CEO Andy Hornby and others for their adoption of a dangerous business strategy. Will they be tackled now? After 7 years it seems exceedingly unlikely.

Another culprit for the disaster is identified as the Financial Services Authority (FSA), for poor supervision and reactive management style, but as that is now conveniently defunct, that is surely a dead issue now.

In reality this report is much too late and should have been produced in months not years. Punishment of malefactors years later is no incentive for others to behave in future, and it seems highly unlikely that there will be any such actions anyway. Like pay incentives, effective ones are those that “pay out” in the short term. Disincentives such as punishment for poor behaviour need to be invoked promptly. Justice needs to be swift, and a report produced seven years later will just cause folks to yawn and dismiss it because they have other short term priorities to deal with in the financial world.

But if you want to read the post-mortem on this issue the report is available here: . But the corpus of evidence is quite dead.

Roger Lawson

Stockbroker Transfers – Why So Long?


Why, oh why, do transfers between stockbrokers take so long? Having just suffered the second delay of three months or more to simply switch from using one stockbroker (or “investment platform” as some now prefer to call themselves) to another, I am now writing to the Financial Conduct Authority (FCA) to demand some action on behalf of investors.

Other ShareSoc Members have reported similar delays on a regular basis and I am building up a portfolio of cases to support our submission to the FCA. So if you have suffered from this problem please send me details of how long it took, who were the brokers that were involved and any other information that might help to explain the delay.

These delays are exceedingly frustrating as they prevent you from trading stocks while the transfer is taking place – which is of course a positively dangerous situation if you are holding some companies. The regulators have been keen to ensure the quick transfer of bank or cash ISA accounts and these can normally now be done within 10 and 15 days respectively. But share ISAs, SIPPs and even direct holdings (for example personal crest account holdings), simply seem to take forever, however much you chase the parties involved.

It is very “anti-competitive” behaviour in the market for financial services when such delays are imposed. It deters people from changing to get cheaper rates, or a better service. My recent transfers were prompted by increases in charges and withdrawal of services by the brokers concerned.  It might not have deterred me but it would have done others no doubt.

Note that this does not seem to be a problem specific to individual brokers, which is why I have not named the culprits, or the number or type of holdings in the portfolios. It seems to be a pervasive industry problem.

So send me the evidence to if you have suffered like me. Any information sent will be only disclosed to the FCA and not made public – it can also be anonymised if you prefer.

Roger Lawson

Better Finance Press Release on Shareholder Rights Directive

The following press release has just been issued by Better Finance – an organisation that represents private investor associations:



Brussels, 9 November 2015 – The Commission’s proposal for the review of the Shareholder Rights Directive (SRD), aimed at countering wide-spread short-termism in favour of a long-term perspective in the governance of listed companies by stimulating stronger shareholder engagement, was presented to the European Parliament (EP) and Council. Whereas the EP largely backed the EC’s proposals for the draft law and partially adopted its resolution in plenary on 8 July, proposed revisions to the existing SRD are currently still up for negotiation in the informal trialogue meetings between the European Parliament, the Council and the Commission.

The draft that will be negotiated largely ignores the stated aims of the SRD review and will do very little to improve shareholder engagement. A case in point is the fact that the charging of higher fees for cross-border voting inside the EU will not be prohibited, despite repeated demands from EU individual shareholders.

Shareholder engagement is further hampered by the proposed SRD in that it ignores the voting rights of individual shareholders whose shares are lodged in omnibus (“nominee”) accounts.

What’s more is that the SRD proposal as approved by the EP runs counter to the aim of the proposed Capital Markets Union (CMU) to integrate capital markets in the EU. For all intents and purposes the SRD in its current form means that we are now looking at a Capital Markets Union without a single market for EU-wide shareholder engagement. With individual shareholders’ rights being ignored, it is fair to say that the SRD is turning into an “Intermediary Rights Directive”, as the ECON vice-chair correctly put it.*

Contact information:


Chief Communications Officer  Arnaud Houdmont

Phone   0032 (0)2 514 37 77