Skip to content

8 February, 2023

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categories

      • View All
      • Board Moves
    • CEO legacy

      Long-standing CEOs can leave a legacy of trouble for boards

      Performance and productivity can suffer after a long-tenured chief executive leaves the company, researchers find.

    • cost-of-living crisis Aviva highlights cost-of-living crisis

      Fund calls for ‘mindful’ pay ratios, showing executive pay is now firmly an issue for...

    • diversity talent pipeline News round-up: this week in governance

      Target diversity early; directors job market 'ossified'; US extends duty of oversight; 'kindness bias' hinders...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • mission zero

      Can the UK achieve net zero by 2050?

      To gain economic benefits, UK businesses will need resilient and flexible supply chains to provide...

    • governance recession

      What use is governance in a recession?

      Companies seeking competitive advantage in uncertain times will find that effective governance allows much sharper...

    • climate litigation

      Climate litigation: how 2022 will shape 2023

      This past year saw a rise in climate litigation, with a focus on the commercial...

  • Comment
      • View all
    • A week of business moving to the centre of human rights

      A week of events signals the initiatives underway to have companies play a central role...

    • audit reform IIA Why we need audit reform right now

      There is an "urgent need" for reform to the audit landscape as well as internal...

    • climate change energy crisis Sustainability and climate change: the other energy crisis

      The world is addicted to cheap energy. We need to admit this and have the...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • Board priorities 2023 Board priorities 2023: tact, trust and transparency

      We asked key figures what would help boards this year. The answers ranged from 'smarter...

    • Group of investors/shareholders in glass building Climate issues likely to figure prominently at next year’s AGMs

      A recent webinar heard that say-on-climate voting is expected to rise, while ESG remains a...

    • NEDs role NEDs ‘needed more than ever’ in times of uncertainty

      The non-executive director’s role is to both challenge and listen to management, agreed the panel...

  • Careers
      • View all
      • Selection
      • Board Moves
    • CEO legacy Long-standing CEOs can leave a legacy of trouble for boards

      Performance and productivity can suffer after a long-tenured chief executive leaves the company, researchers find.

    • diversity talent pipeline News round-up: this week in governance

      Target diversity early; directors job market 'ossified'; US extends duty of oversight; 'kindness bias' hinders...

    • NED recruitment News round-up: this week in governance

      Your country needs NEDs; governance does not compute; financial firms get more women on board;...

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Edelman Trust Barometer 2023

      2023 Edelman Trust Barometer

      The report is the result of the Edelman Trust Institute's research, which sampled more than...

    • Sophos 2023 Threat Report

      Barriers to entry for would-be cybercriminals are lower, with tools and tactics becoming available to...

    • The C-Suite Outlook 2023: On the Edge

      The Conference Board 2023 C-Suite Outlook survey reveals the events that C-suite executives see as...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology

Non-executive overload

by Gavin Hinks on November 20, 2015

Pub chain chairman Tim Martin has an uncompromising view of corporate governance – he believes it can do more harm than good. He explains to Board Agenda his views on shareholders, governance and his concerns about the proliferation of non-executive directors.

Image: Shutterstock

Tim Martin, chairman, Wetherspoons
Tim Martin, chairman, Wetherspoons

Tim Martin, chairman and founder of pub company JD Wetherspoons, is famously outspoken about UK corporate governance.

Martin has even used the company’s annual report to make his views clear and in recent interviews has repeated his claims. He believes that UK corporate governance is too City-centric and causes executives to be overly focused on keeping shareholders happy, rather than paying heed to the views of their customers and employees.

“The road to hell in pub companies lies in emphasising the views of shareholders over those of employees on the ‘front line’,” he wrote in Wetherspoons’ 2014 annual report.

Not great news for shareholders but possibly the bluntest and most frank corporate governance opinion set out in any recent corporate communication.

In an interview with Board Agenda Martin explains why compliance with the UK Corporate Governance Code is getting in the way of doing business.

At the core of his complaint is the belief that boards have become overloaded with non-executives who, he says, now outnumber executive managers and force a compliance-first culture.

“In my look at the pub industry the companies that have followed the guidelines have got into trouble and the companies that followed them least closely have done well,” says Martin.

“There’s an expression…when experience is not retained, infancy is perpetual. You’ve got a bunch of infants taking the reins at PLCs.”

He points to troubled supermarkets as another case in point. Martin claims they have too many non-executives and too few people experienced in running shops.

“There’s an expression,” says Martin, “when experience is not retained, infancy is perpetual. You’ve got a bunch of infants taking the reins at PLCs.”

City-centric part-timers

For Martin, the dominance of non-executives and chairmen means companies are too heavily influenced by “part-timers” and focused on the wrong issues.

Martin’s problem with non-executives is twofold. Firstly, he says, non-executives take courses that cause them to be overly focused on compliance, or risk looking bad.

Secondly, Martin says the governance code is too City-centric, meaning it concentrates excessively on shareholder interests and fails to emphasise customers and employees—the two constituents that he insists matter most in the success of a company. In fact Martin complains bitterly that the code barely offers mention of customers and employees, while citing shareholder interests at every opportunity.

Tim Martin, chairman, Westherspoons
Tim Martin, Wetherspoons

“You ask most non-execs what their job is and they’ll say, ‘We’re here to act on behalf of independent shareholders,’ … as opposed to acting in the long-term interests of their customers, their employees, the country, etcetera. It’s gone awry.”

Shareholders, he says, are not well placed to provide a view on the long-term future of a company because their interests are always in the near future. This means that consulting or engaging with shareholders cannot produce a coherent long-term view of where companies should go, according to Martin.

“An institutional fund manager turns over their portfolio twice a year. So what knowledge will one of those shareholders bring to bear?” He adds that shareholders should be consulted, but adds a caveat by emphasising that it is more important to consult with long-term shareholders than those in it for a quick return.

Code control

Martin believes compliance with the governance code has become an end itself regardless of whether it produces the right result. He cites the creation of remuneration committees as an example. Martin says they were intended to control excessive executive pay but since their introduction pay levels have only rocketed.

Martin has been so incensed by what he sees as the failures of governance he wrote about it extensively in JD Wetherspoons’ last annual report. But he turned to Walmart’s founder Sam Walton to bolster his argument, quoting a line from his autobiography.

“If we fail to live up to somebody’s hypothetical projection for what we should be doing, I don’t care.”

“What’s really worried me over the years is not our stock price, but that we might some day fail to take care of our customers or that our managers might fail to motivate and take care of our [employees]…Those challenges are more real than somebody’s theory that we’re heading down the wrong path…As business leaders, we absolutely cannot afford to get all caught up in trying to meet the goals that some…institution…sets for us. If we do that, we take our eye off the ball…If we fail to live up to somebody’s hypothetical projection for what we should be doing, I don’t care. We couldn’t care less about what is forecast or what the market says we ought to do.”

Indeed, Martin is quick to recount his own meeting with shareholders, who were keen that the company switch its strategic tack by introducing tenanted pubs because other pub chains were performing well with the same model.

“We told them to go forth and multiply. It was the most absurd idea from anyone ever. Anyone with half a brain knew that was impossible for us,” says Martin.

Change is coming

Martin is not without recommendations to resolve the problems he sees. He wants boards to be composed of a minimum of 50% executives and says a chief executive should be allowed to become chairman, citing Stuart Rose of Marks & Spencer as a prime example.

He wants corporate governance reports dramatically limited in length and insists they reject jargon in favour of plain English. He says this approach to language should include the accounts.

Most of all he believes reform of governance is inevitable. “It’ll definitely change, because it will have to,” says Martin.

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • Nokia appoints three new non-executive directors to the board
    April 13, 2022
    Nokia logo on building in Espoo, Finland

    Lisa Hook, Thomas Saueressig and Kai Öistämö have been elected to the Nokia board following the company AGM last week.

  • FirstGroup appoints Myrtle Dawes as non-executive director
    April 5, 2022
    FirstGroup logo

    Dawes is solution centre director at the Net Zero Technology Centre, and will be a member of FirstGroup’s responsible business committee.

  • Dunelm appoints Kelly Devine as non-executive director
    March 8, 2022
    Dunelm store in Mansfield, England

    Devine is president, UK and Ireland, at Mastercard and previously held a number of leadership roles at American Express.

  • Simon Dingemans joins WPP as non-executive director
    February 2, 2022
    WPP business cards

    Dingemans is a senior adviser at global investment firm The Carlyle Group and a former chief financial officer of GlaxoSmithKline.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

governance, non-executive directors, Tim Martin, Wetherspoons

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us

 

 

 

 

Most Popular

  • Investors favour votes against directors over say-on-climate proposals
  • Shell overhauls its board
  • ESG grows in importance as driver of M&As
  • What use is governance in a recession?
  • News round-up: this week in governance
 

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

2022 AGM Season Forecast: An Eye on The Horizon

To help prepare for AGMs in 2022, Equiniti (EQ) hi...

Stakeholder Engagement: A Roadmap for UK Plc Boards

This guide aims to provide directors and their col...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
Leadership in AI report

Leadership in AI

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Editorial Advisory Board
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|