TIDMJDW
RNS Number : 6504T
Wetherspoon (JD) PLC
25 November 2021
25 November 2021
J D WETHERSPOON PLC
Major investors and advisors are breaching the Corporate
Governance Code, says Wetherspoon
Wetherspoon is disappointed to note that a minority of major
investors and corporate governance advisors are breaching the 2018
Corporate Governance Code (the "Code") by using a "box-ticking"
approach to its guidelines.
The Code explicitly discourages box -ticking and states that its
guidelines should not be implemented in a "mechanistic" way.
The Code requires investors to pay "due regard to individual
circumstances" of companies and to "assess differing company
approaches thoughtfully".
However, Wetherspoon's observations are that some advisors and
institutions pay lip service to the Code, and appear to exercise
their votes in an entirely mechanistic way.
For example, if non-executive directors have been on a board for
more than nine years, some investors will vote against them for the
purposes of the AGM, for being in breach of the so called
"nine-year rule", without proper consideration of a company's
explanations, which drives a coach-and- four through the "comply or
explain" aspect of the Code.
This rigid approach is especially questionable where investors
themselves, on their own boards, do not observe the nine-year rule,
but then try to impose that rule on others.
Fidelity, a major investor, has voted against two experienced
Wetherspoon non-executive directors. However, it does not seem that
the boards of Fidelity companies themselves observe the nine-year
rule.
For example, Fidelity Investments, which has over $4 trillion of
assets under management, has, according to Bloomberg (see appendix
1), four directors and does not have a majority of independent
directors - nor are there any dates, transparently disclosed,
regarding the length of tenure of the directors.
If major investors do not observe the rules themselves, it
cannot be right to vote against directors of investee companies,
especially when investees have adhered to the "comply or explain"
requirements.
As for corporate governance advisors such as PIRC, ISS and IVIS,
they also seem to base their recommendations on a "mechanistic"
approach, in breach of the Code's requirements.
They do not to appear to engage with individual companies, in
our experience, and have certainly never engaged with Wetherspoon,
in any meaningful way.
Companies like Wetherspoon are only advised of the AGM voting
recommendations of governance advisors a few hours before the
deadline they impose for responses.
The advisors invariably limit the scope for responses to their
recommendations to 'factual corrections only' - which in
Wetherspoon's view, does not comply with the spirit of the Code,
since the Code says that:
"investors should engage constructively ...and pay due regard to
individual circumstances.... explanations must not be evaluated in
a mechanistic way".
Wetherspoon chairman Tim Martin said:
"The harsh reality, in our opinion, is that corporate governance
advisors, and some major investors, are themselves in breach of the
Code.
"This is creating a situation in which many UK PLCs have, to
their detriment, inexperienced boards. Almost no UK PLCs today have
any NEDs who were at the company in the last (2008-2010) recession,
for example.
"It's noticeable that many successful American companies do not
adhere to the arbitrary nine-year rule, which, Wetherspoon
believes, is a sensible approach.
"However, some American companies seek, even so, to impose the
nine-year rule on their investees.
"In order for there to be commercial success, companies must
retain experience and culture.
"The corporate governance world needs to gets its act together,
by eschewing a box-ticking approach, or it will inevitably continue
to weaken the structure of businesses which are important to the UK
economy"
Appendix 1
Board Members of FMR LLC (doing business as Fidelity
Investments) *
Abigail Pierrepoint Johnson "Abby" - Fidelity Management and
Research Co.
James Charles Curvey - FMR LLC
Gerald McGraw "Gerry"
Karen Kaplan - Hill Holliday Connors Cosmopulos Inc.
* As reported by Bloomberg.com on 25 November 2021
END
Enquiries:
John Hutson Chief Executive Officer 07970 477377
Ben Whitley Finance Director 07970 477428
Eddie Gershon Company Spokesman 07956 392234
Nigel Connor Company Secretary 07818 232529
Please send any questions by email to
investorqueries@jdwetherspoon.co.uk
Notes to editors
1. J D Wetherspoon owns and operates pubs throughout the UK. The
company aims to provide customers with good-quality food and drink,
served by well-trained and friendly staff, at reasonable prices.
The pubs are individually designed, and the company aims to
maintain them in excellent condition.
2. Visit our website: www.jdwetherspoon.com
3. This announcement has been prepared solely to provide
additional information to the shareholders of J D Wetherspoon, to
meet the requirements of the FCA's Disclosure and Transparency
Rules. It should not be relied on by any other party, for any other
purposes. Forward-looking statements have been made by the
directors in good faith, using information available up until the
date on which they approved this statement. Forward-looking
statements should be regarded with caution, because of the inherent
uncertainties in economic trends and business risks.
4. The current financial year comprises 53 trading weeks to 31 July 2022.
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END
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