Terry Smith lashes out at shareholders

Terry Smith, the chairman of Collins Stewart, has lashed out at shareholders who complain about uncapped bonuses and demand “platitudes” on environmental commitments and other such “tosh”.

Writing in a typically forthright manner in Friday’s Financial Times, he argues that some investors’ corporate governance demands waste the time of public companies and give an advantage to private rivals, which are free from such scrutiny.

Mr Smith, who is also chief executive of inter-dealer broker Tullett Prebon, said investors who pester him with paperwork before annual meetings have “an approach to business [that] might be described as ‘Swampy does corporate governance’.”

Among those singled out are churches, charities, Co-operative Insurance and the Association of British Insurers, some of which hit back on Thursday.

“It’s a duty of shareholders to candidly express their views,” said Ian Jones, head of responsible investing at Co-operative Insurance. “If we’re not supporting a particular resolution we write to a company as a matter of courtesy – not because we’re whingeing.”

Mr Jones added: “We would normally expect to see a cap on bonuses ... [If not] it is incumbent on the board of directors to provide a justification.”

The Church of England said it required a broader view of corporate responsibility: “In a sense one is tempted to turn that [criticism] back on the company: if they feel they are only going through the motions because they feel they have to that says something about the company.”

Both Mr Jones and the Church defended the ABI guidelines, although the Church conceded that “anything manmade can be improved”.

Peter Montagnon, director of investment affairs at the ABI, said: “Our disclosure guidelines are non-prescriptive and not excessively demanding in terms of detail; most companies comply and many are happy to do so.”

Two years ago Mr Smith gave a yet more forceful indictment of the ABI to the Sunday Telegraph. Mr Smith writes Friday that after those comments, “I lost count of the number of public company chief executives who said they wholeheartedly agreed”.

In a speech Thursday night, Sir Christopher Hogg, chairman of the Financial Reporting Council, said investors should step up scrutiny, but added: “In my book, the sin of thoughtless box-ticking ranks in deadliness alongside that of sloth.”

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