Blog : BOARD TALK
|Posted on September 15, 2015 at 10:00 AM|
There are so many examples at the moment of business finding a way around better corporate governance - the very essence of a business, as Stephen Green told us so well.
Never underestimate the prevalence and the power of lobbying. There has been predictable business backlash against the UK National Living Wage (NLW) announced by Chancellor George Osborne in his summer budget, but support has come from unexpected places.
Today the Resolution Foundation report: Taking Up The Floor: Exploring The Impact Of The National Living Wage on Employers looks at the impact across industries and says it will be affordable to most, although it could have a severe impact on others.
But around half of the employees set to benefit from the NLW are in industries where the resulting wage bill increase will be by 0.6% or less, according to the report. Corporate Governance includes taking such considerations into account when taking a business forward. What about offsetting rises by looking at executive pay ?
So the BOOM BOOM BOOM of lobbying resounding around mainstream media is one way of dodging the real issues at hand.
Then there is just ignoring best practice - as the Bank of America is demonstrating so well. The FT reported yesterday:
"Bets on a fall in the share price of Bank of America spiked last week to their highest level in more than two years, ahead of a crucial vote on whether to allow Brian Moynihan, chairman and chief executive, to continue in both roles.
At an extraordinary meeting next week, shareholders will decide whether to endorse a decision the board took last October, when it gave Mr Moynihan, then chief executive, the additional role of chairman, while promoting board member Jack Bovender to a new role of lead independent director."
There was also a binding shareholder vote to split the CEO and Chairman roles in 2009.....but perhaps BofA is making a statement that the financial crisis is well and truly over, with no more lessons to be learnt.
And the third example of shocking corporate governance in business wins today's award - the Institute of Directors called its board "dysfunctional" - yep, it's Sports Direct.
This Guardian editorial says it all. We get the businesses we tolerate. And no, Jonathan Guthrie in the FT (can't find the link sorry ) Mike Ashley being an "entrepreneur" is no excuse for anything at all.
Corporate Governance is the very essence of a business - on that, anyway, Stephen Green was right.