Responsible Investor

reaction was: I’ve already thought about it.
The third reaction was: if I haven’t thought about it then I’ve already hired a lot of people to think about it.
By then, your time is up. For a variety of reasons, US shareholders have no power, which is not the case in Europe. So, having no power it is quite difficult to get responsibly involved. In the UK where shareholders do have power they have become responsibly involved and have done some fine things. The lack of constitutional power of US shareholders makes it one of public confrontation with little scope for change.

Responsible Investor: But US shareholders have the power of the AGM?

Bob Monks: At the AGM you are allowed to introduce the resolutions that the Securities and Exchange Commission (SEC) says you can and the SEC is a very unhappy organisation in terms of its susceptibility to pressure from the corporate community.
For example, I had 40% of the vote behind me at the Exxon AGM in support of a resolution that they should have an independent chairman. It’s the sixth year that I’ve had the resolution on the ballot and I get more support every year. When I get to 50% they’ll probably start ignoring me more seriously!
The feeling in US corporations is that corporate governance and responsible investing is just a lot of high falutin language that takes up a great deal of time and removes power from the chairman.
Responsible Investor: Is litigation the only sanction available to investors then?

Bob Monks: Yes, I do see this as the only tool for shareholders. There are so many laws of unintended

consequences unfortunately. It was never intended by the lawmakers of the US that there would be a few very talented class action lawyers that would be able to command the attention of the top executives in US companies through legal action. But, in light of the seriousness of the cases that have come up and the fact that it has been proved that they can get the attention of the top management, we’ve been able to make a lot of changes.

“the SEC is a very unhappy organisation in terms of its susceptibility to pressure from the corporate community.”

It’s one of the reasons that I am here in the Europe at the moment.
I am a consultant to the law firm that is consulting with investors on the beginning of the settlement of the case in Alaska regarding BP. (Note: In February this year a group of investors in BP launched a class action in Alaska against the £70m severance package offered by BP to John Browne, its former chief executive.)

Responsible Investor: What has been the influence of foreign pension funds on corporate governance in the US?

Bob Monks: Their role is critical and they are punching way above their weight. For a variety of reasons, institutions in the US of the quality of the Universities Superannuation Scheme or the Shell pension fund won’t associate themselves with shareholder activism.

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