Small shareholders in bid to make RBS a better run company

Press Release 100 – RBS in the firing line as ShareSoc renews campaign

RBS Shareholders Requisition Shareholder Resolution for a Shareholder Committee.

Over 100 shareholders in the Royal Bank of Scotland (RBS) have requisitioned a resolution to install a “Shareholder Committee” at the company, which will include shareholder representatives, to improve the corporate governance and shareholder engagement at RBS.
RBS will now have to put this proposal to a vote at their Annual General Meeting (AGM) in May 2018.
ShareSoc and UKSA have supported and coordinated this and will deliver the resolution and a large bundle of associated requisition forms to RBS’s London offices on Friday 29 December at 15.30.
Second year of campaign.

Why are ShareSoc and UKSA doing this?

Mark Northway, ShareSoc Chairman said “Shareholders, including individuals, deserve a new approach; one with greater involvement and more effective input from them as ultimate owners. RBS, given its incredibly poor track record and consequent taxpayer support, should now be leading from the front in governance matters.”

Cliff Weight, Director of ShareSoc who has coordinated the campaign said “The current method of engaging between shareholders and listed UK companies doesn’t work. We think our proposal at RBS is a good starting point and an example for others to follow.”

The rationale for a shareholder committee is as follows:

Shareholder Engagement

The informal nature of current shareholder engagement (cosy chats with selected shareholders behind closed doors) does not work well for the broad shareholder base. It is not clear whether investors are each being told the same story, how information is being spun, or whether complete or only partial information is being given out. Investors will ask different questions during engagement meetings and so may develop different interpretations of what the company is trying to achieve.

Ad hoc engagements tend to only occur when a problem arises.

Currently, when a large number of investors are “consulted”, it is difficult to have the same conversation with each investor and the proposal often changes over the process of engagement. Currently, the different views of different investors create a very “messy” backcloth in which to engage.

For example, in relation to remuneration proposals, there is often no clear trail from the initial proposal through to the final version voted on by shareholders.

Voting happens too late in the process. Discussion and voting at the AGM is ineffective, as institutions do not like to vote against the directors’ recommendations. A more professional and systematic process is required.

This impasse can be broken through the introduction of Shareholder Committee.

Benefits of establishing a Shareholder Committee:

Systematic briefings between the company and knowledgeable Shareholder Committee Members.
Shareholder Committee Members will develop good background knowledge, relationships and trust with the company over time.
Shareholder Committee Members will be presented with consistent information and explanations, and members will have a forum for the exchange of questions and views.
Increased transparency.
A Shareholder Committee will report to all shareholders via the annual report, AGM or other route as appropriate.
A Shareholder Committee will focus on governance and strategy issues, and will not interfere with the day-to-day management of the company.
A Shareholder Committee can be established on a purely advisory basis and does not require any specific powers.
A Shareholder Committee might also include workers, customer representatives and other key stakeholders if desired. There is considerable flexibility on how it might operate in practice.
It is unlikely that the cases of Persimmon, BP, BHS and Sports Direct would have occurred if such a committee had existed at those companies. And the problems would surely have been resolved quicker if each had had a Shareholder Committee.

Last year’s campaign and lessons learnt

As last year, ShareSoc will be requisitioning a resolution for a Shareholder Committee at the 2018 RBS AGM. This year’s resolution addresses the trivial legal objections previously raised by RBS. ShareSoc is confident that RBS will be obliged to put the resolution to the AGM.

In early 2017, RBS rebuffed ShareSoc’s first attempt to requisition a shareholder resolution, hiding behind tenuous, expensive legal arguments: https://goo.gl/5xuvBM

ShareSoc Director and Campaign Manager Cliff Weight said “This year, we are hoping RBS will engage with us and work constructively in developing an improved corporate governance framework. Since ShareSoc first engaged with RBS in December 2016, there have been several positive developments which we recognise and applaud, but there remains much more to be done on shareholder democracy”.

Further details of the ShareSoc/UKSA RBS Shareholder Committee Campaign are at https://www.sharesoc.org/campaigns/rbs/

Historic problems at RBS

Strategy: an excessive focus on the short-term, rather than prioritisation of long-term sustainability, the large acquisition of ABN Amro for £49 bn with excessive leverage, and a failure to focus on customers.

Operations: not treating customers fairly, miss-selling mortgage-backed securities in the United States, LIBOR fixing, PPI miss-selling, 2008 rights issue, GRG, bad treatment of SMEs. £3.9 bn has been set aside for claims, but some sources say claims could be $27 bn.

Executive Pay: PR surrounding executive pay has impacted the brand, huge criticism of pay complexity, excessive bonuses, complex LTIPs, payments for failure, as well as the overall quantum.

Culture: excessive risk, short-termism, greed and irresponsibility was allowed and to some degree encouraged; a pale, male and stale Board, with one woman out of 18 directors in 2008. This still persists: there are still only 4 women out of 14 board members today.

Note that RBS investors can obtain more information and register their interest in supporting this initiative on this page of the ShareSoc website: https://www.sharesoc.org/campaigns/rbs/

For further information and interviews, please contact:

Cliff Weight

RBS shareholder, ShareSoc Director and RBS Shareholder Committee Campaign Co-ordinator.

Post Date: December 30, 2017

Group description:	SIGnet Taunton is a new group with around 10 keen members at present, with a range of investment styles and experience. We welcome new members.
Meeting Type/Venue:	In person meetings at a golf club near to the centre of Taunton.
Meeting Frequency/Timing:	We meet on the first Monday of every month at a golf club near to the centre of Taunton, 11am until 3pm with a lunch break.

Group description:	An online group for those who are new to investing, or have only been investing for a few years. Including topics such as: – What is a share or a bond, why and how to buy them. – Comparing funds, unit trusts, Investment trusts and exchange traded funds. – Portfolio management and diversification. – ISAs, pensions, SIPPS and how to save tax. – How terms such as PE ratio and dividend yield are used to value a share. – How to use technical analysis or charting.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Monday of the month at 7:00pm.

Group description:	An online group for those who already have some experience in investing. Covering topics such as finding companies to invest in, financial statements and ratios, valuation / margin of safety, analysis of companies and investment trusts and exchange traded funds.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Wednesday of the month at 7:00pm.

Group description:	The Equity Income Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on dividend paying Investment Trusts, though there is also discussion around individual shares.
Meeting Type/Venue:	Meetings are held online.
Meeting Frequency/Timing:	Meetings are held every 6 weeks on a weekday between 7 and 8:30pm.

Group description:	The Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on all types of income generating financial instruments, from stocks through Trusts and Funds and ETFs to retail bonds. Meetings involve presentations from members, who are also expected to lead discussions from time to time, as well as discussions on what has been bought and sold since the last meeting.
Meeting Type/Venue:	Meetings are in-person in a venue in Central London.
Meeting Frequency/Timing:	Meetings are usually held on the last Thursday of every other month, starting with an informal lunch around 1pm followed by discussions until around 5pm.

Group description:	A welcoming group open to all types of investors. Typical meeting content is to have a deep dive presentation on a topic selected by the participants and a session on buy/ sell/ key lessons learnt last month.
Meeting Type/Venue:	In person at a friendly pub close to Piccadilly Circus
Meeting Frequency/Timing:	Monthly during the evening on the first Wednesday of the month.

Group description:	Our group is a broad church that contains investors of varying experience. Our members’ backgrounds are diverse and include corporate banking, engineering, teaching and the leisure industry. We generally pick a discussion topic for every meeting, e.g. housebuilders or the defence industry, and members are invited to research and discuss different aspects or companies within that industry. We also discuss stocks and investment trusts that we have bought, sold or are interested in and the reasons behind our decisions, and try to make sense of the ever changing investment environment. Discussions are robust and challenging but we are a friendly and approachable group who welcome investors of all levels – we just ask that you contribute, at whatever level you can.
Meeting Type/Venue:	Our meetings are held in a private room at a nice pub near to South Ealing tube station (Piccadilly Line), not far from Ealing Broadway (District, Central and Elizabeth Line).
Meeting Frequency/Timing:	We meet every 2 months, usually on a Wednesday morning at 11am.

Group description:	All levels of experience welcome. A typical meeting agenda includes: – Macro Environment – Trades: Members review existing positions and identify securities with promising TA entry patterns or setups and with suitable risk/reward. Any security, long, short, futures, options may be considered. The convener takes actual positions in trades and maintains his own detailed ledger, accurately measuring performance of individual securities and cumulative activity. Members are notified by e-mail prior to the entries or exits that are decided upon. Following each meeting an updated copy of the ledger is circulated together with the next meeting agenda. Members may wish to maintain similar ledgers of their own but there is no obligation to do so. – Technical Analysis: Techniques and systems used in trades. Members can request discussion of particular aspects of TA.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	The first Tuesday of every month from 7 to 9pm

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Small shareholders in bid to make RBS a better run company

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