A sign of the cross

The Church Commissioners for England, managers of the Church of England’s £10bn investment fund, really have taken against energy giants.

IPE, a trade mag for the pensions industry, reports that the commissioners are planning against the reappointment of all directors at the AGMs of Shell, Total, Occidental Petroleum and Exxon, over the companies falling short on climate change reforms.

Olga Hancock, head of responsible investing at the Commissioners, told IPE : “High energy prices produced huge profits at oil and gas companies last year—a golden opportunity to invest very significantly in the transition to a low carbon economy, and one that was comprehensively missed.

“So we will be supporting all the relevant climate resolutions, and voting against all of their directors.”

Diversity aftershock

A study reveals that some investors got jumpy when US companies started talking about diversity, equity and inclusion during engagement calls in the wake of the George Floyd murder and the civil unrest that followed.

Researchers have found that, on average, there was -0.7% in stock in reaction to the calls, suggesting some investors were less than happy about DEI issues being raised in calls. It is difficult, though, to rule out the possibility of other causes.

The same study found that 29% of companies had a diversity conversation in conference following Floyd’s death at the hands of police officers.

In addition, the study also found that the number of Black directors’ appointments to boards after the killing rose steeply, to more than 30%.

Deloitte and Joules

Watchdogs at the Financial Reporting Council have opened another audit investigation, this time looking at the work of Deloitte at fashion retailer Joules Group.

Inspectors will look at financial statements for the group for the year ending 30 May 2021. Joules went into administration late last year and was subsequently bought by Next.

Feel like a million bucks?

Efforts by some City grandees to talk up the prospects of higher pay for UK executives continue. The current debate revolves around whether UK executives can earn better pay in the US. The piece cites the departure of Namal Nawana from Smith & Nephew in 2019 as an example of an executive dissatisfied with UK pay levels.

According to Smith & Nephew’s 2020 annual report, Nawana was paid £3.3m for leading the company.

Mark Freebairn, head of board practice at Odgers Berndtson, tells the FT : “There is genuine anxiety about losing executives to the US. It’s happening at chair, CEO, CFO and non exec levels.”

Meanwhile, Luke Hildyard, head of the High Pay Centre, a think tank, tells Board Agenda: “It’s a little tone deaf for a bunch of multi-millionaires to come and say that the problem with the UK economy is that multi-millionaires aren’t paid enough.”

Activist dilemma

Here’s a heads-up about responding to activist investors: Some boards get “highly defensive” and add new directors to the board.

But this is not necessarily a good thing. Richard Mansouri, a veteran of inveestment managment, writes for Forbes that this kind of reactive response serves to illustrate to activists that boards are, indeed, reactive and “oblivious to some other underlying problem(s) at hand”.

Sudden board appointments are immediately suspicious of new directors because “one has to consider that the new directors added to the board have been chosen by the people currently on the board.

“Which raises a fundamental question that must be asked: If the current board has been unaware of the existing problems at a company, why should anyone have confidence in their selection of new directors?” So, hold your horses on expanding the boardroom next time an activist comes sniffing.

Forces to be reckoned with

Looking for a new director? Well, you might want check if your candidates have an old regimental badge, because new research suggests military experience is a boon for boards.

A team from the University of Edinburgh looked at more than 7,000 companies with directors who had once been in uniform, cross matching the data with stock returns, and found positive results.

The team conclude: “The boardroom performance of directors with military experience may be better in terms of leadership, monitoring, making ethical decisions, and utilizing valuable networks from their time in the military.”