The (Bonus) King Makers
Today’s article is mainly by JIMTHETIM53. I’ve borrowed some information re shareholding from a post by CORKCELT-which should not be taken as meaning that he approves of the rest of the content-with additional thoughts of my own at the end.
BMCUWP was posting recently about the massive salary and bonus paid to Peter Lawwell. Who decides this? Are the directors involved wary of him? Or even cowed by him,so to speak. I was thinking about who the directors are on the remuneration committee.
The Remuneration Committee is chaired by Tom Allison. The other members are Brian Wilson and Ian Bankier.
The Remuneration Committee determines the terms of engagement and remuneration of the Company’s executive Directors, Company Secretary and certain senior executives, on behalf of the Board. The Committee also monitors the Company’s executive share option scheme and implementation of other executive and employee incentive schemes.
A detailed report is included within the Annual Report.
All of the above are Non Exectutive directors. In other words they take nothing to do with the day to day running of the business. They do not report to Peter Lawwell. In fact it is their responsibility to keep an eye on him! To make sure the operational directors and senior managers are following the strategy set out by the board and that the business integrity is maintained.
However… We also have Dermott Desmond as an non exec director,but is the largest shareholder. It would be naïve to think that he doesn’t pull a few strings. With the % shareholding he has, he could call a general meeting and with an unspoken of concert party could get rid of anyone.
It would seem that Companies House is aware of the possibility of board room bullying:
In “The Companies Act 2006: Directors Duties Guidance
we read “Many cases of corporate mismanagement have arisen because directors have allowed themselves to be side-lined by one or more dominant ﬁgures on a board. Such ﬁgures can be powerful personalities and may seek to prevent otherwise independent directors from making necessary enquiries into the company’s affairs. It is essential to the proper functioning of a board that all directors should be encouraged to make enquiry. In a large company the Chair of the board has a particular role to play in fostering the correct ethos.”
So there you have it. Why PL is one of the best paid CEOs in British football. Who’s going to stand up to DD & PL? Apparently we are not the only firm with weak Non Executive Directors.
In addition,as CORKCELT pointed out yesterday,it would now be very difficult indeed for the smaller shareholders to influence any board decisions. While Dermot Desmond has always been the major shareholder since we waved goodbye to Fergus,it seems the small shareholders,the typical fan who bought into the club during the original share offer,has been sidelined.
“Re Celtic Shareholders. Desmond holds holds 34.9 & an Investment House Lindsell Train Ltd hold 17,4 % so between these 2 there is a majority of 52,3%..
Another 3 Shareholder Christopher Trainer, James Keane &Thomas Allison between their individual holdings account for a further 20.2%.
So 5 shareholders hold 72.5% of the Company.”
My own thoughts on the make-up of the board (writes BMCUWP) is that it is in a comfort zone,with everyone too familiar with everyone else. It is generally accepted that a CEO has a shelf life of around 5 years. It seems that PL may have as many shelf lives as a cat. Also,the non-executive directors have by and large been in situ for too long-are they still looking under the bonnet of the vehicle,or are they content to have it driven for them,regardless of where it is going? On top of that,I would challenge their very independence-though not in all cases-because of their past associations with our CEO.
Now,the chairman is supposed to lead the board. As Dermot Desmond is a rare visitor,I venture the suggestion that the board is actually being led by the very CEO who is meant to answer to them. That,by the way,is a CEO who operates to his own design,and without recourse to a Chief Operating Officer.
Overall,it looks like we have a dysfunctional board which is operating on its own whims,and with a lack of independent oversight or balance. And there’s nothing we can do about it,because we no longer have the share ownership.
Grateful thanks to JIMTHETIM53 for the gist of the article,and to CORKCELT for the information on current shareholdings. If you would like to write the Article of the Day,mail it to Mahe