Shareholders and Governance of the Trustees

This comes from a 2009 Parliamentary report after the banking crisis but may be apposite: “''' We are particularly concerned that fragmented and dispersed ownership combined with the costs of detailed engagement with firms by shareholders has resulted in the phenomenon of 'ownerless corporations' described to us by Lord Myners. …..Too often, eminent and highly-regarded individuals failed to act as an effective check on, and challenge to, executive managers, instead operating as members of a 'cosy club' '''.”

Governance
As of June 2014 the shareholders numbered about 7,500 with over 90% becoming shareholders in the decades before 2000. Only 311 shareholders are shown on the Shareholder Register who joined in the last decade. As of  a specifically called General Meeting in July 2012 the number of elected candidate positions was reduced to 9 from 12 and the number of co-opted Trustees [Directors] remained at 6. This Resolution came into effect for the 2012 elections and a single candidate position was available and  Ms. Kimbell was elected in January 2013.

Also in 2013 a LongTerm Incentive Plan for four of the senior executives was agreed which potentially could pay them 100% of salary for each of three years with lesser amounts for partial achievement of targets. The cost  to the charity for 100% achievement is £2,500,000 approximately. The Consumers' Association financial year runs July to June. The dates for the meetings were the bonus was discussed and subsequently agreed are here:

http://www.newspryng.co.uk/2014/08/which-owner-consumers-association-faces-members-revolt-over-bonuses-and-executive-pay/

The current position is: 2012 4 elected; 2013 1 elected; 2014 3 elected giving a total of eight for the 2014 Council. This reduced to seven when a newly elected Director resigned in February 2014. In a letter dated August 4 th 2014 the Company Secreatry advised that there would be three trustee vacancies to be filled in 2014 but adds this "'''the Council will be appointing additional members in 2014 until the 2015 AGM." '''

Please see the section http://which.wikia.com/wiki/Recent_Elections where I give details of the election results and the Articles of Association which appear to have been breached by Council. [This following section in italics became redundant as apparently in March 2014 Council used two of its existing co-opted members to be "appointed" as elected members. You and I were meant to deduce this by looking at the page on Council members attending meetings sent in early August with the AGM papers and noting two little markers against their names 7/10/14 ]

''I have pressed Council strongly that the appointment of the two runner-up candidates who should have been given the vacant positions is the only equitable answer. However Council have chosen to defer the situation further and avoid two new faces at the Council meetings running up to the AGM in November and given the newly elected are not in place until February 2015 it seems extremely unsatisfactory Governance.''

When you realise that the abrupt introduction of a cap on Council aimed at the reduction of elected members has lead us to the situation where currently we only have seven genuinely elected out of nine required and it looks as if Council are incompetent.

Overall  this present position reveals that the sudden decision in 2012 to ditch three of the elected members was badly thought through. Unless it was imperative to reduce the number of elected that year the most elegant solution was to elect one less candidate over the following three years. The questions are -

why: did they not choose the simple and elegant method?

why: was there no forum provided to debate the reduction in elected?

 why: all the co-opted positions remained and the reduction was solely in elected members?

Standing as a Candidate for Trustee
This is derived from my experience in 2013.

Getting a form for your nominators to sign is no problem but when received it is rather off-putting to find that it has spaces for all five of your supporters to sign, The immediate thought is who is likely to know five subscribers let alone five shareholders. The obvious answer is those who are already on the Council!

You are entitled to ask for shareholder addresses in two areas. Tip do not ask for the Outer Hebrides or too narrow an area as you will have small choice to write to. And possibly much smaller now that Which? has offered all shareholders the chance to opt out of the nomination process. I have requested figures for this.

I wrote to 35 shareholders requesting nomination on the basis I was very unhappy with the pay rates for executives and had I believe 6 sponsors in the end.

Next hurdle is that Council has decided that there should be only three candidates for every vacancy and your election address to the voters has to be provided to the Trustees before you can be considered for the next step..

This was a quandary for me as having railed at Council and its “open purse” it might be damaging to put that up to them as my election address to the voters. I therefore went on the basis of Which? providing more pragmatic action and highlighting the of use members to make testing more relevant. As it happens last year they allowed ten to stand possibly as my nomination arrived at the last possible moment and they had already whittled down the field.

Now there are four other major hurdles for new candidates:
1. Previous members of the Council tend to get re-elected. So this year there are three existing members eligible to stand and assuming they stand, and in a normal year, they would probably be re-elected.

2. Do you meet the Councils desired profile? Those that they would be particularly interested in hearing from.?

3. Shareholders form less than 1% of the people eligible to vote. They are also the only people to receive the Accounts and the AGM Minutes which might alert them to any problems with Council.

4. The extension of the franchise to anyone who has had a subscription for more than a year to any of the Which? products may seem a triumph for participation but in fact has hugely diluted the ability of shareholders to manage the Directors/Council. It is feasible to write to the current shareholders however there is no possibility that Which? can or would provide you with a list of subscribers.

*3.13 

If the number of candidates validly nominated exceeds by a factor of three the number of vacancies on the Council, the Council may (but shall not be required to) exclude one or more of the candidates validly nominated so as to reduce the number of candidates to stand in the election, but in that case the number of candidates remaining to stand in the election following such exclusion must be at least three times the number of such vacancies. The Council shall determine the method by which any such exclusion shall take place, and having done so, shall follow that method. That method must be one which gives no advantage to candidates who are already members of the Council and may be - 

(a) by lot; or

(b) by a process of selection which will tend to favour an outcome which could achieve, all other factors being equal, a more appropriate representation on the Council of women or men; of ethnic groups; of the young, the middle aged or the elderly; of people from different parts of the United Kingdom; of people representative of OMs generally; and of people with what the Council consider to be knowledge and experience appropriate or desirable for a Council member. 

This comes from a 2009 Parliamentary report after the banking crisis but may be apposite:

“We are particularly concerned that fragmented and dispersed ownership combined with the costs of detailed engagement with firms by shareholders has resulted in the phenomenon of 'ownerless corporations' described to us by Lord Myners. …..Too often, eminent and highly-regarded individuals failed to act as an effective check on, and challenge to, executive managers, instead operating as members of a 'cosy club'.”