RBS chairman Davies under threat in corporate governance row as investors lose patience

Chairman Sir Howard Davies has become the target of a shareholder revolt that is emerging ahead of Royal Bank of Scotland’s upcoming annual meeting.

Small investor group ShareSoc is angry at Davies for refusing to set up a shareholder committee to give retail investors more say in how the bank is run.

ShareSoc says shareholders in the still more than 70 per cent state-owned, bailed-out bank should vote against the pay scheme for directors and the re-election of Davies in protest.

RBS has also refused to allow a resolution to be put to the AGM on May 11 to establish such a committee, saying the bank is not obliged to.

Yesterday we revealed new research that showed a widespread lack of visibility and awareness of Scottish boards amongst their employees, with 44 per cent of respondents unable to name a single member of the board at the company they work for, compared with 39 per cent across the rest of the UK.

ShareSoc chairman Mark Northway, said: “It is very disappointing that RBS are effectively taking the position that they will only make substantial improvements to their governance models and shareholder engagement processes if such improvements become mandatory.”

Sir Hward said: “We have been very clear in our support for enhanced corporate governance and, in particular, stakeholder engagement and are actively participating in the government’s ongoing consultation.

“RBS will adhere to the letter and the spirit of any new rules or guidelines the government might put in place.”

I was pleased to note that a recent report from the Business, Energy and Industrial Strategy Committee firmly endorsed the idea of wider stakeholder panels.

The group is also annoyed that chief executive Ross McEwan only has to hold shares equal to 400 per cent of his salary. That means he could sell all but £4 million of his stock.

It has previously been reported McEwan will not be selling any of his shares while he is still boss of the bank, except those that need to be shed for tax purposes. It is understood this is still the case.

“RBS should require executive directors to hold their shares until two years after they leave,” ShareSoc said.