Wetherspoon accuses major investor of breaching Corporate Governance Code

Pub group JD Wetherspoon has accused one of its major investors of paying “lip service” to the 2018 Corporate Governance Code by using a "box-ticking" approach to its guidelines while breaking the code itself.

In a Stock Exchange announcement last night, the group said that financial services company Fidelity International had voted against two Wetherspoon non-executive directors at its AGM for being in breach of the 'nine-year rule'.

The announcement said: “However, it does not seem that the boards of Fidelity companies themselves observe the nine-year rule."

Wetherspoon accused Fidelity of not having any "dates, transparently disclosed, regarding the length of tenure of the directors" and said: “If major investors do not observe the rules themselves, it cannot be right to vote against directors of investee companies.”

Fidelity contended that while it was a private company, the names of its board members were publicly available, the majority of which had joined within the past nine years.

Wetherspoon chairman Tim Martin (pictured) said: "The harsh reality, in our opinion, is that corporate governance advisors, and some major investors, are themselves in breach of the code.

"This is creating a situation in which many UK PLCs have, to their detriment, inexperienced boards. Almost no UK PLCs today have any non-executive directors who were at the company in the last [2008-2010] recession, for example.

"It's noticeable that many successful American companies do not adhere to the arbitrary nine-year rule, which, Wetherspoon believes, is a sensible approach.

"However, some American companies seek, even so, to impose the nine-year rule on their investees. In order for there to be commercial success, companies must retain experience and culture.

"The corporate governance world needs to gets its act together by eschewing a box-ticking approach, or it will inevitably continue to weaken the structure of businesses which are important to the UK economy."

A Fidelity International spokesperson said: "The RNS includes significant misinformation. Fidelity International (FIL Limited), is a major shareholder in Wetherspoons. Fidelity International was founded as the international arm of Fidelity Investments (FMR) in 1969 but became independent in 1980 and we are completely separate entities.

"Our parent company is FIL Limited. The names of the FIL board members are provided in FIL Limited’s Pillar 3 disclosure, which is publicly available. I can confirm that a majority of the FIL Limited board members joined the board within the past nine years.

"We have not made our voting decision for Wetherspoons in a mechanistic way. As mentioned in our original communication on our voting intentions to the company, we appreciate the value of having experienced members on the board with a deep knowledge of the business. We do, however, believe that there is value in having a critical mass of qualified and independent outside directors on the board."