UK - Railtrack is the "daddy of corporate governance scandals", according to the National Association of Pension Funds' (NAPF) investment council chairman Alan Rubenstein, but the NAPF will not be asking its members to co-sign a letter to the Treasury, as 20 leading fund managers did to protest at the government's handling of the collapsed rail infrastructure company.
At the conference, Rubenstein told delegates: “As part of the Institutional Shareholders Committee, the NAPF has been lobbying for a quick solution to this mess. I believe the Government has a limited time, perhaps as little as four weeks, to solve this problem before the next part of the ‘Son of Railtrack’ process begins and we are locked into who knows how long a timescale before residual value can be released.
“It is an opportunity I believe the Government must seize, because I read in the press that the Treasury is somewhat sceptical about the so-called threat from 20 fund managers about the cost of financing future projects.”
Rubenstein told IPN he would expect all the NAPF’s members to agree with the views on Railtrack he expressed at the Association’s investment conference in Edinburgh today.
But, he said he was not sure what a letter to the Treasury - from UK pension funds protesting over Railtrack - would achieve.
In his chairman’s welcome to delegates, Rubenstein also said that the NAPF was now roughly in agreement with Paul Myners’ recommendations in his review on institutional investment. At the time of the launch of the Myners report, the NAPF said there were three issues which it thought required further consideration:
* payment for trustees* small schemes’ compliance* commission proposals
Rubenstein said: “The Treasury's initial response, particularly on the commission question, felt rather like being at a Hawkwind gig in the late 70's - a hell of a lot of noise but you couldn't make out the words.
“However, tellingly, over time the noise died down and the words became clearer. Reviewing each point now, it is clear the Myners team have moved to a position very similar to ours, so we are essentially at one with the aims Paul has espoused.”
On the issue of remuneration, Rubenstein said: “In the most blatant cases of abuse, we will not hesitate to recommend to our members that they vote against the re-election of all directors concerned. After many years of lobbying the DTI, I am delighted the Secretary of State has agreed there should be a vote on the remuneration committee's report. And while this will only have advisory status, I do hope companies will be sensible enough to listen to their shareholders’ advice.”
He also announced a modification to the NAPF's Code of Corporate Governance.
In future, the NAPF will advise its members to vote against any proposed deals which involve unreasonable or unjustifiably expensive defence tactics having the sole or principal purpose of deterring third party takeover bids which might otherwise have been advantageous to the target company's shareholders.
He said: “The NAPF advocates a level playing field with no artificial hindrances to shareholders' proper consideration of the merits of competitive bids.”
However, Rubenstein also said that non-executive directors (NEDs) should be paid more.
“If NEDs are to spend more time with each company, this naturally means they will have to accept fewer appointments. And before the howls of protest come let me say, I believe that rates of pay for NEDs are too low even before adjusting for more time in
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