Sunday 18 March 2018

Shareholder activism is a fact of life for companies today

John Mulligan

John Mulligan

Shareholder activism is a relatively new concept for Ireland.

In the UK, PIRC highlights corporate governance issues to shareholders of various companies. PIRC can be very influential in persuading shareholders that they should or shouldn't back plans being put forward by companies.

But by and large, that advice has been more often directed towards shareholders of companies outside Ireland. That's changing, though, with its opposition to yesterday's share bonus resolution a key example of PIRC's increasing interest in Irish corporate affairs. PIRC had also advised shareholders to oppose a Ryanair resolution to approve the annual report. That resolution was opposed by 13pc of the votes – a very high percentage for what is normally a straightforward vote.

This summer, PIRC railed against Elan after the Irish Independent revealed that the drug firm's boss, Kelly Martin, was set to reap millions from the $8.6bn (€6.4bn) sale of the Irish group to US-based Perrigo. "Examples like this show both why shareholders need to be alert to what companies put into directors' contracts and why a binding vote on remuneration policy is vital," said PIRC. "In an ideal world shareholders ought to get an upfront vote on contractual terms."

PIRC had advised Elan shareholders to vote against a report by the company's "Leadership, Development and Compensation Committee".

The report was defeated, with 58pc of votes opposing it.

Earlier this year, PIRC claimed that all long-term incentive plans constructed to keep key executives in place are "fundamentally flawed" and that it would not be supporting the introduction of any new ones.

Irish Independent

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