Renowned fund manager Neil Woodford has condemned those in the asset management industry who “do not think like owners, because they are borrowing stock rather than investing in it”.
His views on corporate governance appeared in a report by activist group High Pay Centre, which campaigns against the high levels of remuneration in the City. The report, ‘Restoring responsible ownership’, was written by Chris Philp MP but also contains comments from Woodford.
He also said that in many institutions, corporate governance duties have been separated from fund management responsibilities with the result that engagement is often not as effective as it should be.
”Short-termism, which is frustratingly rife in fund management, also hinders the UK’s institutional investment industry’s ability to hold executive management teams to account in an appropriate and effective way,” Woodford said.
Woodford backs the initiatives set out in the report, which include curtailing the “excessive executive pay” for senior management in FTSE 100 companies, averaging £6 million (€7 million) per year, according to the report.
Woodford recently caused a stir in the City by scrapping bonuses for his staff.
While Woodford has criticised the Eurozone in the past, he added that firms would do well to adopt some of the best practices already in place around Europe, which would help boards become accountable for their long-term performance. This would have “meaningful benefits flowing to shareholders and the broader UK economy”.
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