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| Wetherspoon boss hits out at 'up the spout' City rules | Wetherspoon boss hits out at 'up the spout' City rules |
| (about 1 hour later) | |
| Corporate governance institutionalises navel-gazing, says Tim Martin | Corporate governance institutionalises navel-gazing, says Tim Martin |
| The pugnacious founder-chairman of JD Wetherspoon has taken up arms against the City, turning his talent for polemic away from Brexit and towards the financial establishment. | The pugnacious founder-chairman of JD Wetherspoon has taken up arms against the City, turning his talent for polemic away from Brexit and towards the financial establishment. |
| In a lengthy tirade – now a customary feature of Wetherspoon’s stock exchange statements – Tim Martin dismissed UK corporate governance rules as “up the spout” and criticised two major institutions that own a chunk of the company he built. | In a lengthy tirade – now a customary feature of Wetherspoon’s stock exchange statements – Tim Martin dismissed UK corporate governance rules as “up the spout” and criticised two major institutions that own a chunk of the company he built. |
| He also lashed out at the investor advisory group Pirc, which has publicly rebuked Martin for spending £95,000 of company money on pro-Brexit literature without first seeking approval from shareholders. | He also lashed out at the investor advisory group Pirc, which has publicly rebuked Martin for spending £95,000 of company money on pro-Brexit literature without first seeking approval from shareholders. |
| The diatribe dominated a scheduled trading statement to the stock exchange that runs to more than 3,000 words, of which only 20 referred to the pub company’s recent trading. | The diatribe dominated a scheduled trading statement to the stock exchange that runs to more than 3,000 words, of which only 20 referred to the pub company’s recent trading. |
| Martin might argue that any failure on his part to delve deeply into the latest sales numbers is neither here nor there, because – as is customary for Wetherspoon – they were rather good. | Martin might argue that any failure on his part to delve deeply into the latest sales numbers is neither here nor there, because – as is customary for Wetherspoon – they were rather good. |
| While many high street operators are having a tough time, consumers love the cheap beer and bargain breakfasts and burgers for which the chain, now known widely as just ’Spoons, is famous. Like-for-like sales, which strip out the impact of pub openings and closures, were up by 5.3% in the last three months. | While many high street operators are having a tough time, consumers love the cheap beer and bargain breakfasts and burgers for which the chain, now known widely as just ’Spoons, is famous. Like-for-like sales, which strip out the impact of pub openings and closures, were up by 5.3% in the last three months. |
| Wetherspoon’s habit of posting rising sales time after time proves that, for all the wrath Martin inspires among those who detest his pro-Brexit rants, business is good. | Wetherspoon’s habit of posting rising sales time after time proves that, for all the wrath Martin inspires among those who detest his pro-Brexit rants, business is good. |
| Critics crowed after the company’s last set of annual figures showed a 4.5% fall in pre-tax profit. Some suggested this was evidence that Martin’s opinions, which have inspired such Twitter hashtags as #BoycottWetherspoons, were finally making drinkers splutter out their pints and go elsewhere. What they failed to mention is that sales – the real measure of what customers think – were up 7.4% and profits only fell due to an increase in costs. | Critics crowed after the company’s last set of annual figures showed a 4.5% fall in pre-tax profit. Some suggested this was evidence that Martin’s opinions, which have inspired such Twitter hashtags as #BoycottWetherspoons, were finally making drinkers splutter out their pints and go elsewhere. What they failed to mention is that sales – the real measure of what customers think – were up 7.4% and profits only fell due to an increase in costs. |
| The company’s robust financial performance is not the only reason Martin may feel entitled to use statements to the stock exchange as his own personal soapbox. | The company’s robust financial performance is not the only reason Martin may feel entitled to use statements to the stock exchange as his own personal soapbox. |
| When the company floated on the stock exchange in 1992, it had just 44 pubs. These days it has 900, employing more than 37,000 staff and pulling in annual revenues of £1.8bn. Martin remains the biggest shareholder, with a 32% stake in the £1.7bn business, worth nearly £550m. | When the company floated on the stock exchange in 1992, it had just 44 pubs. These days it has 900, employing more than 37,000 staff and pulling in annual revenues of £1.8bn. Martin remains the biggest shareholder, with a 32% stake in the £1.7bn business, worth nearly £550m. |
| In other words, Martin built the platform from which he now preaches, typically in favour of a no-deal Brexit that most business figures describe in apocalyptic terms. | In other words, Martin built the platform from which he now preaches, typically in favour of a no-deal Brexit that most business figures describe in apocalyptic terms. |
| The latest subject of the publican’s ire was the City, particularly corporate governance rules, box-ticking shareholders and the groups that advise them on how to vote at annual investors’ meetings. | The latest subject of the publican’s ire was the City, particularly corporate governance rules, box-ticking shareholders and the groups that advise them on how to vote at annual investors’ meetings. |
| Martin reserved the strongest criticism for Pensions & Investment Research Consultants (Pirc), which provides research and advice on corporate governance issues to institutional shareholders. Pirc claims to provide “a robust, independent and unconflicted view of the companies in which our clients invest” – and recently urged shareholders to vote against the Wetherspoon’s annual report. | Martin reserved the strongest criticism for Pensions & Investment Research Consultants (Pirc), which provides research and advice on corporate governance issues to institutional shareholders. Pirc claims to provide “a robust, independent and unconflicted view of the companies in which our clients invest” – and recently urged shareholders to vote against the Wetherspoon’s annual report. |
| It cited the pub chain’s £95,000 outlay – without seeking shareholder approval – on almost 2m pro-leave beer mats, posters and other anti-EU booklets before the 2016 referendum. | It cited the pub chain’s £95,000 outlay – without seeking shareholder approval – on almost 2m pro-leave beer mats, posters and other anti-EU booklets before the 2016 referendum. |
| The pubs boss flagged the Twitter profile of Alan MacDougall, the founder of Pirc, where the corporate governance expert describes himself as an “ex-Eurocommunist”. | The pubs boss flagged the Twitter profile of Alan MacDougall, the founder of Pirc, where the corporate governance expert describes himself as an “ex-Eurocommunist”. |
| Martin wrote: “In my opinion, many people equate communism with fascism, since millions of Europeans perished or were imprisoned under its yoke.” | Martin wrote: “In my opinion, many people equate communism with fascism, since millions of Europeans perished or were imprisoned under its yoke.” |
| Pirc, which declined to respond to Guardian requests for as response, also advised investors to vote against Martin’s re-election as a director at Wetherspoons’ annual meeting on 21 November on the basis that he has been chairman for more than nine years. In fact he has been chairman of the company, which he founded 40 years ago, for 36 years. Martin pointed out that MacDougall still sits on his own board after 33 years. | Pirc, which declined to respond to Guardian requests for as response, also advised investors to vote against Martin’s re-election as a director at Wetherspoons’ annual meeting on 21 November on the basis that he has been chairman for more than nine years. In fact he has been chairman of the company, which he founded 40 years ago, for 36 years. Martin pointed out that MacDougall still sits on his own board after 33 years. |
| The nine-year limit is one of many UK corporate governance guidelines which Martin blamed for the “failure or chronic underperformance of many businesses, including banks, supermarkets, and pubs”. Too much power, he said, was vested in part-time non-executive directors, who tended to be inexperienced, rather than executives with “real expertise”. | The nine-year limit is one of many UK corporate governance guidelines which Martin blamed for the “failure or chronic underperformance of many businesses, including banks, supermarkets, and pubs”. Too much power, he said, was vested in part-time non-executive directors, who tended to be inexperienced, rather than executives with “real expertise”. |
| He wrote that none of the UK’s big banks now have any non-executive directors with experience of the last banking crisis “when it is clear that inexperienced boards were a major factor in that crisis”. | He wrote that none of the UK’s big banks now have any non-executive directors with experience of the last banking crisis “when it is clear that inexperienced boards were a major factor in that crisis”. |
| He also pointed to collapsed companies that complied with governance guidelines, like Carillion, Thomas Cook and Northern Rock, and declared: “The UK corporate governance system is up the spout – and is itself a threat to listed companies – and therefore to the UK economy.” | He also pointed to collapsed companies that complied with governance guidelines, like Carillion, Thomas Cook and Northern Rock, and declared: “The UK corporate governance system is up the spout – and is itself a threat to listed companies – and therefore to the UK economy.” |
| A core problem with the governance guidelines, he said, “is that corporate governance institutionalises short-termism, inexperience and navel-gazing”. | A core problem with the governance guidelines, he said, “is that corporate governance institutionalises short-termism, inexperience and navel-gazing”. |
| Martin also criticised two of his own major shareholders, Columbia Threadneedle and BlackRock, which opposed the re-election of some of Wetherspoon’s long-serving non-executive directors at last year’s annual meeting, pointing out that they also had directors on their own boards who breached the nine-year rule. | Martin also criticised two of his own major shareholders, Columbia Threadneedle and BlackRock, which opposed the re-election of some of Wetherspoon’s long-serving non-executive directors at last year’s annual meeting, pointing out that they also had directors on their own boards who breached the nine-year rule. |
| He said Wetherspoon had the backing of two of its largest shareholders, without naming them. “Not all institutions behave like Columbia Threadneedle and BlackRock. Common sense does exist, in small pockets, in the City.” | He said Wetherspoon had the backing of two of its largest shareholders, without naming them. “Not all institutions behave like Columbia Threadneedle and BlackRock. Common sense does exist, in small pockets, in the City.” |
| A Columbia Threadneedle spokesperson said: “We shared our views on corporate governance issues in a private meeting with Wetherspoon, as is our normal approach. We remain a long-term investor in the company.” | A Columbia Threadneedle spokesperson said: “We shared our views on corporate governance issues in a private meeting with Wetherspoon, as is our normal approach. We remain a long-term investor in the company.” |
| A spokesperson for BlackRock said: “Board governance and director accountability are at the heart of investment stewardship. Our vote against the non-executive directors reflects our concerns about executive remuneration and board independence, which based on our analysis is well below market norm of 50%. | |
| “With respect to BlackRock’s own governance, our board is more than 80% independent.” | |
| Rancour between charismatic founder-bosses and their shareholders is nothing new, but Martin is in a stronger position than many. | |
| Sir Martin Sorrell relished a scrap with shareholders, but was eventually ousted from his advertising empire WPP after years of seeing his stake diluted and finally becoming embroiled in unseemly scandal. | |
| The Sports Direct tycoon Mike Ashley is another who rarely shies away from a fight. While he retains his grip, his reputation has been tarnished by a series of bad investments. | The Sports Direct tycoon Mike Ashley is another who rarely shies away from a fight. While he retains his grip, his reputation has been tarnished by a series of bad investments. |
| For the moment, though, with sales still on the up, the share price doubling in the last three years and nearly a third of the company under his personal control, Martin remains untouchable. | For the moment, though, with sales still on the up, the share price doubling in the last three years and nearly a third of the company under his personal control, Martin remains untouchable. |