Propel Morning Briefing Mast HeadAccess Banner  
Propel Morning Briefing Mast Head Paul's Twitter Link Paul's Twitter Link

BrewDog Banner
Morning Briefing for pub, restaurant and food wervice operators

Fri 26th Nov 2021 - JDW – major investors and advisors are breaching the Corporate Governance Code
JDW – major investors and advisors are breaching the Corporate Governance Code: Tim Martin, founder and chairman of JD Wetherspoon, has accused major investor Fidelity of damaging public companies over its approach to governance while breaking rules itself. In an announcement to the London Stock Exchange last night after markets had closed, the company said: “Wetherspoon is disappointed to note that a minority of major investors and corporate governance advisors are breaching the 2018 Corporate Governance Code (the ‘Code’) by using a ‘box-ticking’ approach to its guidelines. The Code explicitly discourages box-ticking and states that its guidelines should not be implemented in a ‘mechanistic’ way. The Code requires investors to pay ‘due regard to individual circumstances’ of companies and to ‘assess differing company approaches thoughtfully’. However, Wetherspoon’s observations are that some advisors and institutions pay lip service to the Code, and appear to exercise their votes in an entirely mechanistic way. For example, if non-executive directors have been on a board for more than nine years, some investors will vote against them for the purposes of the AGM, for being in breach of the so called ‘nine-year rule’, without proper consideration of a company’s explanations, which drives a coach-and-four through the ‘comply or explain’ aspect of the Code. This rigid approach is especially questionable where investors themselves, on their own boards, do not observe the nine-year rule, but then try to impose that rule on others. Fidelity, a major investor, has voted against two experienced Wetherspoon non-executive directors. However, it does not seem that the boards of Fidelity companies themselves observe the nine-year rule. For example, Fidelity Investments, which has over $4 trillion of assets under management, has, according to Bloomberg, four directors and does not have a majority of independent directors – nor are there any dates, transparently disclosed, regarding the length of tenure of the directors. If major investors do not observe the rules themselves, it cannot be right to vote against directors of investee companies, especially when investees have adhered to the ‘comply or explain’ requirements. As for corporate governance advisors such as PIRC, ISS and IVIS, they also seem to base their recommendations on a ‘mechanistic’ approach, in breach of the Code’s requirements. They do not appear to engage with individual companies, in our experience, and have certainly never engaged with Wetherspoon, in any meaningful way. Companies like Wetherspoon are only advised of the AGM voting recommendations of governance advisors a few hours before the deadline they impose for responses. The advisors invariably limit the scope for responses to their recommendations to ‘factual corrections only’ – which in Wetherspoon’s view, does not comply with the spirit of the Code, since the Code says that: ‘investors should engage constructively …and pay due regard to individual circumstances.... explanations must not be evaluated in a mechanistic way’.” Martin said: “The harsh reality, in our opinion, is that corporate governance advisors, and some major investors, are themselves in breach of the Code. This is creating a situation in which many UK PLCs have, to their detriment, inexperienced boards. Almost no UK PLCs today have any NEDs who were at the company in the last (2008-2010) recession, for example. It’s noticeable that many successful American companies do not adhere to the arbitrary nine-year rule, which, Wetherspoon believes, is a sensible approach. However, some American companies seek, even so, to impose the nine-year rule on their investees. In order for there to be commercial success, companies must retain experience and culture. The corporate governance world needs to get its act together, by eschewing a box-ticking approach, or it will inevitably continue to weaken the structure of businesses which are important to the UK economy.” It comes after Institutional Shareholder Services (ISS), the influential shareholder advisory firm, recommended earlier this month that investors oppose the re-election of Debra van Gene and Sir Richard Beckett as non-executives and abstain on re-electing Martin. Fidelity Investments is Wetherspoon’s 13th largest shareholder while Fidelity International, its international arm before it was spun off into a separate company, is its fifth biggest. The latter is still part-owned by members of the original Fidelity founding family. Martin said his comments applied to both companies, which share some directors and shareholders. A spokesman for Fidelity International told The Telegraph that Wetherspoon’s broadside included “significant misinformation” as “we are completely separate entities”. Fidelity Investments did not respond at the time of writing. “A majority of the Fidelity International Limited board members joined the board within the past nine years,” a spokesman said. “We appreciate the value of having experienced members on the board with a deep knowledge of the business. We do, however, believe that there is value in having a critical mass of qualified and independent outside directors on the board.”

Updated Premium Database of Multi-Site Companies published today, 54 businesses being added: A total of 54 new multi-site companies, operating 369 sites, have been added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released today (26 November), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, includes a number of brands growing through franchise, expanding sports concepts, and regional pub and hotel operators. Premium subscribers will also receive a 3,900-word report on the new additions to the database. The comprehensive database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. The database features more than 2,000 companies in total. Alongside this, Premium subscribers will also receive the fifth edition of the New Openings Database, which is produced in association with StarStock, on Friday, 3 December, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The fifth edition also includes a 17,000-word report on the new additions to the database. Premium subscribers also receive access to another database – the Propel Turnover & Profits Blue Book, which is produced in association with Mapal Group. The Blue Book, which is also updated monthly, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out plus regular video content and regular exclusive columns from Propel group editor Mark Wingett. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. To subscribe, email

Ministers can’t tell if Kickstart jobs scheme is working: Ministers have no way of knowing whether a £2bn flagship youth employment scheme is creating genuinely new jobs, government auditors have said, The Times writes. Rishi Sunak, the chancellor, has hailed the Kickstart programme, launched in September last year, as a critical component of the Treasury’s recovery plan, claiming that it was “transforming” the lives of young people out of work because of the pandemic. However, a report by the National Audit Office said that despite a cost of about £7,000 per participant the government had “limited assurance” over the quality of the placements created by the scheme, or whether the jobs would have been created anyway. At £1.9 billion Kickstart was more than twice the cost per person of the next most expensive work support scheme. The programme was designed to create six-month work placements for young people on universal credit. More than 100,000 young people have started jobs through it. The watchdog said: “As the programme did begin to scale up, the economy was reopening, which increased the risk of government subsidising jobs that would have been created anyway.” It said that the support and training that employers were expected to provide was not specified or routinely monitored. Dame Meg Hillier, chairwoman of the public accounts committee, said: “The jury is out on whether the Kickstart scheme will end up being value for money, and whether it will actually help those young people who truly need it. Given the cash pumped into the scheme, the Department for Work and Pensions has taken a worryingly light-touch approach to setting targets or tracking performance.” A government spokesman said: “The scheme has already delivered over 100,000 new life-changing jobs and will continue to deliver opportunities for young people.”

Return to Archive Click Here to Return to the Archive Listing
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
Monster Energy Banner
Casual Dining Banner
Pago Banners
Peppadew Banner
Commercial Kitchen Banner
Brixton Brewery Banner
Inch's Cider Banner
Santa Maria Banner
HDI Banner
Strongbow Banner
Propel Banner
Cynergy Bank Banner
John Gaunt Banner
Zonal Banner
HGEM Banner
Access Banner
Purple Story Banner
Propel Banner
Christie & Co Banner
CACI Banner
Sector Banner
Airship – Toggle Banner
COREcruitment Banner
Wireless Social Banner
Payments Managed Banner
Hospitality Rising Banner
Greene King Banner