JD Wetherspoon boss Tim Martin ramps up non-exec director ‘hypocrisy’ row with shareholder Fidelity
- Fidelity International voted against reappointment of NEDs on ‘nine-year’ rule
- Wetherspoon boss says the firm should ‘practice what they preach’ on NEDs
JD Wetherspoon boss Tim Martin has stepped up a war of words with shareholder Fidelity amid accusations of hypocrisy over the investment firm’s opposition to the reappointment of directors to the budget pub chain’s board.
Last week Wetherspoon criticised a ‘box-ticking approach to corporate governance’ from some investors, including Fidelity, which it said was ‘not adhering… to rules they required of investees’ in reference to the US firm’s compliance with UK non-executive director rules.
Following pushback on the criticism from Fidelity on Monday, Martin told investors this morning that the firm should ‘practice what they preach’, lashing out a culture of American investors with double standards imposing rules on UK firms.
Wetherspoon chairman Tim Martin says Fidelity International should ‘practice what they preach’ on nine-year rule
It follows calls from shareholder advisory the Institutional Shareholder Services to oppose the re-election of non-executives Debra van Gene and Sir Richard Beckett and abstain on re-electing Martin as chairman.
Fidelity Investments and Fidelity International are Wetherspoon’s 13th and fifth largest shareholder, respectively.
Fidelity International voted against two Wetherspoon non-executive directors. Meanwhile Fidelity Investments voted against Martin and the company’s three executive directors, but voted in favour of all non-execs, including the two opposed by Fidelity International.
The former voted against the pair on the basis they had exceeded the UK corporate governance code’s ‘nine-year rule’.
The ‘rule’ requires UK company non-executive directors (NEDs) to serve no more than nine years on a board, or a firm must be able to explain an exception in the case of specific circumstances.
‘Wetherspoon has fully explained the importance of experienced NEDs and the dangers inherent in the nine-year rule,’ the pub chain said, highlighting that Fidelity ‘does not appear to adhere to the nine-year rule itself’.
Fidelity International is Wetherspoon’s fifth largest shareholder
A Fidelity International spokesperson yesterday insisted that ‘a majority’ of Fidelity International’s board members ‘joined the board within the past nine years’, adding that Wetherspoon’s criticism of the firm included ‘significant misinformation’.
But Wetherspoon said today it is ‘impossible to verify the length of service of Fidelity International’s board members, because this information does not appear to be available on their website’.
It added: ‘Nor does there appear to be any statement of policy in the public documents about adherence to a nine-year rule.’
The Fidelity spokesman has also argued that Fidelity International, which voted against two Wetherspoon NEDs, and Fidelity Investments are ‘completely separate entities’.
But Wetherspoon highlighted that chairman, boss and major shareholder of Fidelity Investments, Abigail Johnson, is also a director ‘and appears to be a major shareholder’ of Fidelity International.
‘It is therefore stretching a point for the spokesman to describe these Fidelity companies as completely separate entities.’
Tim Martin said: ‘An inflexible interpretation of the nine-year rule, and other rules, can result in perverse outcomes and has generally resulted in inexperienced and vulnerable boards of directors in the UK – with, for example, almost no NEDs on boards today who have had experience of the last recession (2008-10) at their current company.
‘A strange fact is that corporate governance has almost never been raised as an issue in the thousands of shareholder meetings I and the management team have had since our flotation.
‘These sorts of issues, for many PLCs, seem to stem from the way in which the corporate governance personnel, who work for major institutions, cast their votes for annual general meetings.
‘We believe it’s important for the future of our business, and for the UK economy, for the comply or explain aspect of the Code to be more closely adhered to, in practice, by institutional investors – and for investors to practice what they preach.’
Fidelity declined to comment further.