Shareholders must play a greater role in scrutinizing and confronting companies about corporate governance failures if they are to prevent “unaccountable” executives from “running amok”, says Lord Myners.
The financial services secretary told a conference organized by the National Association of Pension Funds that having “disengaged” investors leads to “ownerless corporations”, the BBC reports.
Such companies present a “substantial economic risk” because their unsupervised boards are more likely to take reckless decisions, he added.
Lord Myners also called on individual shareholders to form alliances in order to make their voices heard in the boardroom.
“Coalitions of small shareholders often have more influence than single organizations acting alone,” says Myners.
Furthermore, the minister suggested the investors, employees and unions could be given a greater input into the work of corporate remuneration committees.
Earlier this year, Lord Minister told the Observer that the financial crisis was partly triggered by shareholders’ reluctance to confront corporations’ “irrational exuberance”.
D.C.