BIS short-termism review

There's a bit of an early sniff of what might be in the short-termism review in the Telegraph today, which suggests that we should hear something from BIS soon. As I blogged previously, the language in the Takeover Panel report that came out last week gives wiggle room for the Code to be adapted to reflect changes in company law. And it looks like Cable is willing to have a look at making changes here:

"The Takeover Panel didn't go for some of the more radical solutions like restricting the voting rights of short-term investors who have just come in to make a quick killing during a takeover bid," he said.
"There does remain a problem that as far as we can see from the objective evidence takeovers tend to reduce value, not increase it.
"We are going to have to look [at it]. I want to take what the Takeover Panel has done – and it is positive – and probably go rather further.

As I've written before, I quite like the idea of qualifying periods for voting rights, and if I remember rightly Myners trailed the idea in one of his speeches on 'ownership'. Cable also makes reference to an idea that Labour had committed to taking a look at - toughening up shareholder powers in respect of remuneration:

"On remuneration there is an issue that certainly over the last decade executive pay has far outstripped shareholder performance.
"It is a tricky issue whether we legislate to give shareholders more voting power. I don't want to rush in to some crass change that has unintended consequences but we do need to acknowledge that there is a real problem here."

So to go back to my brief post summarising what Labour had said/planned in this area, I would say that we could legitimately claim that Vince Cable is nicking some of our ideas. Not a strong argument I know, but I think it is worth making clear where no new ground is being broken (and it may well be the case that the review covers some issue we hadn't touched on).

I think it is also important that Labour puts out some thoughts on where reform could go further - and the idea of employe representation on remuneration committees is one possible, and it's a reform that I think ConDems would find hard to support despite some good arguments in favour. (And hat-tip to James for alerting me to the fact that Lord Ashcroft included this as one of his polling questions and found that the punters like it). I'm interested in whether Labour-friendly business people think it is actually achievable.

Finally, it's interesting to note that the review will look at shareholder behaviour - I hope this includes a proper look at how institutions use their votes. As I have blathered before, I continue to think that shareholder votes on remuneration could be effective - if only more institutions voted against more often. Perhaps exec pay inflation would have been controlled a bit better if more investors had been willing to say no.