Commentary: Grilled the American way

There were echoes of the movie Wall Street at the Connaught Rooms in London yesterday, where the Ratners board was subjected to a 90-minute grilling at an ill-tempered annual shareholders' meeting. In the film the New York investment banker Gordon Gecko uses such a meeting to preach the virtues of shareholder power. At the Ratners AGM it was a real-life American, James Jenkins, managing director of First Boston Corporation, who stood up and stood out, attacking the 'appallingly' high salaries of Ratners' directors.

In the UK it is rare for institutional investors to open their mouths at an AGM, and even rarer for them to voice real criticism. There are exceptions, such as Postel, Clerical Medical and Legal & General. But most are content to keep their complaints private. They argue that a quiet word with the chairman across the boardroom lunch table is much more efficacious. And if that doesn't work, they can always sell the shares.

Small shareholders do not have access to the chairman's ear. AGMs are their only opportunity to demand answers from the board. Unfortunately, company chairman do not take AGMs as seriously as they should. By bluster, weasel words, flattery and evasion, they can usually outmanoeuvre the small shareholder.

The well-briefed institutional investor is a different proposition. Mr Jenkins was not an ordinary shareholder and was pleading the cause of a quite different class of investor. But his position gave him more clout. And there's nothing quite like publicly shaming a company to bring about quick reform. More UK institutions should follow his example.