A couple of days ago, I posted this tweet, a thinly-veiled criticism of some unseemly behaviours in the Co-operative Group boardroom. The hashtag #hubris was subsequently associated with the tweet, perhaps suggesting that others had similar concerns over what is going on. Leveraging the recent safe deposit box raid in Hatton Garden, Peter Hunt suggested that the "great Co-op Group heist" was a "mighty stitch-up". Strong words indeed. Now Jill Treanor has urged chairman Allan Leighton to reverse the board's plan to put forward three (of it's own) candidates for three vacant positions. This has all become quite messy—it smells of nepotism, egos and power games.
That the incumbent board (or factions within the board, at least) is clinging to power by putting forward three of its own nominations for the three vacancies is hardly good practice. However, that shareholders let the board get away with it is tantamount to dereliction of the shareholder's 'duty'.
Normally, shareholders would be expected to contribute nominations, and then to select directors through some agreed election process. In this case, the tail (certain directors) seems to be wanting to wag the dog (the shareholders). If the shareholders are interested in the performance of the business and in certain outcomes being achieved, they need to assert some control over the nomination process. However, if the shareholders remain passive, the board is free to act as it sees fit—within the bounds of the law and the Co-operative Group's constitution, of course.
One final point. If the shareholders do wish to act, and any of the incumbent directors resist such moves, the shareholders could consider taking the somewhat bolder step, of replacing the uncooperative directors. The good of the company is at stake after all—and let's not forget who the company actually belongs to.
Thoughts on corporate purpose, strategy and governance; our place in the world; and, other things that catch my attention.