Association of British Insurers issues alert to warn of unconventional move by housebuilder in promoting John Watson to chairman
The year 2009 began with a revolt over pay at housebuilder Bellway, which paid executives bonuses even though performance criteria were not met. Among those to benefit was chief executive John Watson, who was handed £275,000. Now Bellway could spark one of the first shareholder rebellions of 2013, not about pay but about the promotion of Watson to chairman on 1 February.
Investors tend to frown upon such moves, regarding them as flouting best practice for corporate governance. Ahead of Friday’s annual meeting, the Association of British Insurers, whose members control a fifth of the stock market, has issued an “amber top” alert to warn of the unconventional move.
Shareholder advisory body Pirc notes that Watson is standing for re-election as a director while he is still chief executive – a role he has held since 1999 – just days before he takes up the post of non-executive chairman. If he had already been elevated to chairman he might be more likely to attract opposition, Pirc suggests.
In its annual report, the company points out that “major investors were consulted in advance of decisions being taken and they were in support of the proposals”. If that is the case, a rebellion will be averted. But still, it could be one to watch.