Directors' pay is now a public issue

London, 6 June 2003

A brutal attack by a disgruntled shareholder on a Unilever co-chairman in the garden of his Dutch home has ignited fears that direct action may be used by campaigners frustrated at their inability to influence boardrooms on corporate governance issues like excessive pay.

Although the suggestion has been dismissed out of hand in some circles, the knife attack on Roel Pieper, which left him badly injured, was attributed by another member of the Unilever board to discussions on corporate pay becoming too personalized and “setting a dangerous trend"

Antony Burgmans told reporters this would lead to “people taking their frustrations out on corporate bosses themselves, placing executives in increased dangers of attacks"

Whether or not this gloomy prediction comes true, there is no doubt that the corporate governance issue of boardroom pay is no longer con fined to the financial press. Hea dlines and editorial comment in newspapers worldwide testify to a growth in public interest, which has kept corporate communications directors fully stretched.

A furious row broke out when reporters - including the man from the Financial Timers - were excluded from a stormy shareholders meeting of Hollinger, which resulted in the Canadian-born newspaper magnate Lord (Conrad) Black agreeing to rethink an arrangement.

Other global companies have attracted the ire of the popular pres, leading to extensive and almost belligerent coverage of annual meetings. At GlaxoSmith Kline, the pharmaceuticals group, angry shareholders sought in vain to persuade the board to withdraw a 22m package for its chief executive which included, in the event of early departure or dismissal, full salary for two years, an extra three years of pensions contributions, another two years of bonuses, and share entitlements for a year after leaving.

Typical of many press comments from across the world was that of the The Scotsman, which asked: “Why is all this a public issue? It is because of the corrosive - and colossal - reputational damage that recent cases have inflicted on companies and the cause of popular capitalism. Nor is this a cause confined to left-wing malcontents. Genuine anger and disgust is being felt by personal - and increasingly institutional - - shareholders"

Politicians have also got in on the act. In Britain a senior member of the Blair administration, the Trade Secretary, Patricia Hewitt, has threatened tighter controls claiming that some pay awards are “literally obscene"