Reward loyal investors not greedy chief execs

At the gala opening night of the 2003 Chelsea Flower Show, an air of shock emanated from the business chiefs who habitually crowd into the event. Their attention to the floral spectacular was even less evident than usual, for they were struggling to assimilate a truly stunning revelation: shareholders in one of Britain’s largest companies had rebelled against the board. 

In an unprecedented move, more than half of the votes cast had opposed GlaxoSmithKline’s remuneration report, deeming it unduly generous to the pharmaceutical company’s top executives. Roger Lyons, the joint general secretary of the manufacturing union, Amicus, was quick to hail it as a triumph. “Corporate greed will never have the same free rein,” he cheered. 
The intervening years have not been the period of restraint that Mr Lyons predicted. After their show of strength at GSK, shareholders resumed their passive stance. Yet now it seems that the revolution really may be dawning. The flurry of shareholder activism in the past few weeks has precipitated a rash of departures from boardrooms and promises to re-examine remuneration policies. The sound-proofing that seems to have insulated so many boardrooms from the discontented rumblings outside may now be cracking. 

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