Article by Chartered Secretary Magazine 23 Sep 2008
An influential City player is arguing that the banking crisis has been worsened by shareholders and banking directors failing to clamp down on excessive bonuses.
In a BBC interview this morning, Paul Myners, the Chairman of the Guardian Media Group and Land Securities, insisted that the banking crisis had revealed failures at every key level of governance. He was alarmed that no one had stepped in to limit the growth of a culture where risky investments were rewarded with enormous bonuses.
'The regulators should have been much more alert to the risk of this move towards more speculation and more personal incentive,' he said. 'The boards of directors, particularly the non-executive directors, should have been asking themselves about what cultures they were encouraging, what behaviours, and what incentive effects they were setting in place'.
In a BBC interview this morning, Paul Myners, the Chairman of the Guardian Media Group and Land Securities, insisted that the banking crisis had revealed failures at every key level of governance. He was alarmed that no one had stepped in to limit the growth of a culture where risky investments were rewarded with enormous bonuses.
'The regulators should have been much more alert to the risk of this move towards more speculation and more personal incentive,' he said. 'The boards of directors, particularly the non-executive directors, should have been asking themselves about what cultures they were encouraging, what behaviours, and what incentive effects they were setting in place'.
He also urged shareholders to take a more active role in the running of their companies:
'The owners – shareholders – need to become much more engaged,' he added, 'They should be asking questions of what their companies are doing, and how they are rewarding people'.
He suggested that shareholders be granted more power, especially in relation to executive remuneration. Mr Myners even went as far as to suggest that investors should be required to approve remuneration polices in advance.
Myers was keen, however, to stress the fact that the crisis had initially emerged in the US, saying the measures he described need to be applied globally if they were to have the required effect.
'We can’t solve all these problems in the UK, this has to be a global initiative - we cannot go it alone. I think the Prime Minister is right to go to New York and Washington to promote an international solution.'
Article as featured in Chartered Secretary magazine.
