A messy analogy

Lord Michael Spencer, billionaire founder of brokerage ICAP, has called for CEOs to be paid like “top-rate footballers”. It’s part of an ongoing effort inside the City to talk up CEO pay levels since London Stock Exchange chief executive Julia Hoggett raised the subject earlier last year.

Comparison with footballers possibly has popular appeal but it’s a step on from the underlying issue. The original argument was London pay had to be more like US pay: if we want US-sized companies, and we want to stop corporates listing elsewhere, (like the US), we need US-sized pay deals.

Which is all a bit confusing because surely pay is reward after the fact, not before, and pay differentials are based on company size: top US companies are mostly sooooo… much bigger. Board Agenda has been here before. Indeed, London School of Economics prof Sandy Pepper wrote that comparing UK and US pay is “magical thinking”.

Lord Spencer may have conjured a football analogy, but will he score? It’s anybody’s game.

It’s all kicking off

Elsewhere, the House of Lords was, ironically, caught up in quite a tetchy debate about football club governance.

Former home secretary David Blunkett proposed that the Football Governance Bill, currently under scrutiny in the Lords, be amended to ensure clubs have non-executive directors working alongside execs.

However, Lord Blunkett couldn’t continue without making a vicious sliding tackle on peers he thought were playing for time, or “filibustering” the bill as it’s known in Parliament, in addition to taking briefings from the Premier League.

This prompted a whole slew of counter attacks, including from Baroness Claire Fox, former Brexit Party centre forward in the European Parliament and one-time squad member at the Revolutionary Communist Party, who denied being anywhere near the ball.

“It is just not fair,” she moaned to the ref. “There is a lot in the bill to get one’s head around and to try to speak to.

“If there is repetition going on in this debate, it is the people on the other side constantly saying that anyone scrutinising the Bill must have been got at by the Premier League.”

Blunkett switched wing (he’s a versatile player) and pressed forward on governance. “We need proper governance that you would expect in any well-run business so that the owners are protected from undue attacks and the fans know that the club is being properly run.”

However, the ref checked his watch and Baroness Twycross scored with her point that the government intends football clubs to be covered by the UK corporate governance code so the need for more explicit mention of non-execs seemed like an unnecessary sub in extra time. Lord Blunkett’s sense of fair play kicked in and he blew the final whistle himself (he withdrew the amendment). It was end-to-end stuff.

SEC scandal

Shock news for boardroom diversity campaigners this week as a US court overturned Nasdaq’s rule that listed companies have two board members representing diversity: one female and one from a minority ethnic group.

In a claim brought by the Alliance for Fair Board Recruitment and the National Center for Public Policy Research, judges of the Fifth Circuit Appeal decided regulators at the Securities and Exchange Commission did not have jurisdiction, drawn from the Exchange Act, to sign off on diversity disclosure rules backing the Nasdaq position.

Judge Andrew Oldham, writing for the majority, said: “There may be other purposes buried in the Exchange Act’s voluminous text, but our review of the Act’s history makes clear that disclosure of any or all information about listed companies is not one of them.”

That’s a blow for diversity proponents and perhaps a sign of things to come under the incoming president.

Asia specific

Here’s a new concept for you when it comes to governance in Asia: “faux convergence”. The term is coined by Gen Goto, law prof at the University of Tokyo and Dan Puchniak, fellow prof at Singapore’s Yong Pung How School of Law, to describe efforts to reform, or “converge”, governance standards along Anglo-American lines.

They note that Asian countries have been updating key governance elements, including stewardship codes and independent directors.

But all is not what it seems. In Japan, independent directors “champion” investor interests; in Singapore, they act as dispute mediators at family-controlled firms. In China, they are often academics offering legitimacy to boards.

Japan’s stewardship code, they observe, seems to be in place to support more corporate risk taking. Meanwhile, in Singapore, it targets controlling families rather than investors.

“The message is clear,” write Goto and Puchniak. “When it comes to corporate governance, looking beneath the surface of formal adoption is essential. Perhaps it is time to recognise that, in this context, what you see is not always what you get.” Let’s hope a board lunch remains the same wherever you are in the world.