Britain's advisory group eyes more power for retail investors

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[October 25, 2016]  LONDON (Reuters) - Investor advisory firm ShareSoc on Tuesday called for greater power to be given to individual shareholders as part of a government plan to overhaul Britain's corporate governance regime.


Prime Minister Teresa May has said she wants to improve the way companies are run, reining in the pay of top bosses after the country's vote to leave the European Union, which was in part put down to anger at growing social inequality.

In a list of seven recommendations to the government's Business, Innovation and Skills Committee inquiry on corporate governance, the group backed plans by May for a binding vote on a firm's pay report.

It also backed disclosure of pay ratios between a chief executive and the average worker, but said the data should be tracked over 10 years and that the CEO's pay should also be measured against the second-highest earner in a company.

ShareSoc, which advises individual private investors in British companies, said it supported plans for a shareholder committee to oversee payouts, and reiterated its calls for average FTSE 100 CEO pay to be reduced by around half.

It also wanted the government to back groups such as ShareSoc to educate individual shareholders on their rights, even if their shares were held in nominee accounts, and to toughen up regulation of the smallcap AIM market.

"Individual investors do not have effective power to curb directors' pay. Fund managers, who are merely intermediaries in the ownership chain, have usurped this power: but have patently failed to provide effective stewardship," ShareSoc said.

"It is time for a strong input from Government and regulators of the London Stock Exchange to change the framework in which we are currently operating. The goal should be to get more power back to the ultimate investors."

(Reporting by Simon Jessop Editing by Jeremy Gaunt)

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