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CBI comments on John Kay’s report on long-termism
The CBI yesterday responded to the Interim Report of the Kay Review of UK Equity Markets and Long-term Decision Making.
Matthew Fell, CBI Director for Competitive Markets, said:
“It is right to focus on long-term performance, and good that John Kay recognises the value of having strong and successful businesses, both to savers investing in shares and the economy as a whole.”
On quarterly reporting, Mr Fell said:
“John Kay rightly identifies that quarterly reporting should go: it is onerous for companies and adds little value for most investors.”
On takeovers, Mr Fell said:
“It is essential, in takeover situations, that boards have a clear mandate to assess a bid in the context of the long-term interests of the company.”
On non-executive directors, Mr Fell said:
“There is a strong business case for more boardroom diversity, both to promote good governance and challenge "group think" mentality. However, shareholders shouldn’t micro-manage a business by getting involved in the selection of non-executive directors, and can already cast their vote through the annual re-election process.”
On tax, Mr Fell said:
“The tax system can play a role in encouraging long-termism, for instance when it comes to share ownership. But introducing a tax on banking transactions, such as the Tobin tax, would only push up capital raising costs for businesses and reduce their growth potential.”
On executive pay, Mr Fell said:
“We agree with John Kay that executive pay needs to be clear and simple. The CBI has called for a single remuneration figure to achieve greater transparency, measures to reduce, withhold, or in exceptional circumstances claw back executive pay, and for remuneration committees to take an organisation’s broader pay strategy into account when setting executive pay.”
Notes to Editors:
The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.
