A discussion about Directors Remuneration

[bullboy8]

I've come across a company that one of the director owns around 55% of the shares. My concern with this is that being the majority holder he can vote in favour of the "directors remuneration report" all the time. It was quite shocking when I found out the directors were getting 200kplus remunerations. I know this is common but surely this is at the expense of the company=shareholders. My concerns are making me think twice about investing now as I don't want these fat cats giving themselves 20%plus annual increases but the earnings/stock price is tanking. My questions are:

1. Can shareholders vote down the "directors remuneration report"? if yes, I remember reading somewhere that even if it is voted down, the board does not need to take action.
2. with this particular company I am referring to, can the director (with 55%holding) simply one day say stop dividends and up his remuneration to £1m. If yes, can shareholders have no say to this?

We seem powerless? or is it really not that bad? Would greatly welcome your comments...

 

[scose-no-doubt]

If you want to know where you stand you need to request a copy of the memorandum and articles of association for the company. They will outline the extent of director's powers.

Good luck

 

[arabianights]

This is standard practice for small firms. I'm fairly sure I own all the shares in my own company, maybe 1 is owned by my accountant.

 

[anley]

Bullboy - you are powerless but it's fair as -

a) you don't have to invest, and
b) if you owned 55% of a company and a shareholder owns say 0.002% of the company what right does he/she have to dictate company policy

So if you want to make a difference you've got to band together with other shareholders to create a group which controls say 20% of the company - then your voice might be heard.

 

[Pat494]

It is typical of the capitalist system

Greedy bosses have been ripping off the rest of the workers and shareholders since time began - so nothing new here but it still causes lots of righteous indignation.

Although Socialists say they are tackling this injustice it's peculiar how they never manage to. Might get in the way of Blair's etc. selling out for more millions.

The trouble with Socialism is, it's a big con. It promotes 19th century propaganda and bankrupts every country that tries it e.g. Greece, USSR etc

The THIRD WAY must be right and fair AND competitive

:clap:

 

[bullboy8]

so can this major shareholder really up his salary to say £1m and stop dividends if he wanted to?

 

[Pat494]

It is typical of the capitalist system

Greedy bosses have been ripping off the rest of the workers and shareholders since time began - so nothing new here but it still causes lots of righteous indignation.

Although Socialists say they are tackling this injustice it's peculiar how they never manage to. Might get in the way of Blair's etc. selling out for more millions.

The trouble with Socialism is, it's a big con. It promotes 19th century propaganda and bankrupts every country that tries it e.g. Greece, USSR etc

The THIRD WAY must be right and fair AND competitive

:clap:

Personally I would like to see "PERFORMANCE RELATED" pay for bosses and politicians.
The last lot of idiot politicians would be owing Britain plc a whole load of money.
The useless SODS

 

[scose-no-doubt]

This is standard practice for small firms. I'm fairly sure I own all the shares in my own company, maybe 1 is owned by my accountant.

yes it's standard practice because you likely have a pro forma set of articles that were created when the company was formed. They are basically just an outline of statute and it's all pretty standard faire in small companies as you say. They can be and normally are amended when more unconnected people are involved in a company e.g. not just family, lovers etc so it's worth him having a look.

WTF does your company do anyway? I imagine it's t-shirts with bigoted slogans or something of the sort.

PS your accountant shouldn't own sh*t. What's the need to give a share?

 

[arabianights]

WTF does your company do anyway?

pollute

 

[scose-no-doubt]

F*** it I'll search for you when I can be ar5ed

 

[episteme]

There is legislation to protect minority shareholder interests so in theory the directors can't do what you say. In practise it will be very difficult and expensive to stop them though.