RUTH SUNDERLAND: Archie Norman's market wisdom

All credit to Archie Norman, chairman of Marks & Spencer, who has launched a campaign to promote shareholder democracy, says RUTH SUNDERLAND

  • Some of Norman’s proposals will be provocative 
  • His most eye-catching is to allow companies to hold digital meetings
  • Digital innovation ought to be harnessed to break down communication barriers 

The Acid House, a film based on three short stories by Irvine Welsh of Trainspotting fame, is perhaps not the most obvious place to look for insights on popular capitalism.

Boab Coyle, one of the leading characters, is having a terrible day: he is booted off his football team, evicted from his parents’ home and, when he calls his girlfriend from a payphone, she dumps him.

Our dejected anti-hero vents his anger by wrecking the phone box, whereupon he is beaten up by a police officer, furious at the vandalism because he holds shares in BT. Fortunately, very few small investors would feel such a visceral sense of ownership.

The problem, four decades on from the privatisations of the Thatcher era, is the opposite: small retail shareholders are increasingly detached from the companies they own.

Private investors were once a real force, with genuine influence in boardrooms.

Anonymous: Something is certainly lost if shareholders cannot question directors in person

Anonymous: Something is certainly lost if shareholders cannot question directors in person

Sixty years ago, individuals owned 54 per cent of the UK stock market. By 1981, this had dwindled to just under 30 per cent and, by 2020, the latest figure available, it had fallen to 12 per cent.

It matters – a lot – that the links between UK companies and small investors have weakened in recent years.

The narrowing of share ownership has co-incided with a more divisive and angrier variant of capitalism and more fractious relations between businesses and society.

So all credit to Archie Norman, the chairman of Marks & Spencer, who as we reported in The Mail on Sunday, has launched a ‘Share Your Voice’ campaign to promote shareholder democracy.

Some of his proposals will be provocative. The most eye-catching is to allow companies to hold digital-only meetings, which would deprive some AGM addicts of their hobby of berating the board then tucking into free food and drink.

The decline of the AGM, which provided a stage for great corporate theatre over the years, including at M&S, is a great shame.

Something is certainly lost if shareholders cannot question directors in person.

Online events, however, are more inclusive for those who cannot travel or take time off work. Perhaps a hybrid of physical and digital is the way forward.

Few would argue with Norman’s points on nominee accounts, however. Most of us now buy shares through nominee platforms, meaning that, in most cases, we have no automatic right to attend the meeting, to vote, or even receive information from the firm. This amounts to a mass disenfranchisement. As Norman correctly points out, digital innovation ought to be harnessed to break down these communication barriers.

Building a relationship with small investors could be beneficial in a number of ways. Their views would be an astringent antidote to boardroom bubble syndrome.

Retail investors are more likely to be animated by defective governance and fat cat pay than fellow members of the City club.

In the Square Mile, there has been a great deal of hand-wringing about London markets losing attractiveness in comparison with the US. The reasons for this are varied and complex, but it seems to me reasonable to speculate that one factor in the US ascendancy is the vibrant small investor culture on that side of the Atlantic.

Sometimes this is over-exuberant but it is part of an aspirational and enterprising value system that can seem lacking here.

We lose the power of the small investor at our peril.


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