Peter Butler, a former director of Hermes who is considered one of the founding fathers of modern corporate governance principles, believes long-term shareholders need to be incentivised to protect their and the company’s interest against the disruption caused by hedge funds. The proposal will spark a heated debate.
Butler said: “Company directors often say there is nothing they can do to fight against hedge funds and short sellers that cause volatility. An extra dividend to long-term shareholders could be this tool.”
Butler, who now runs Governance for Owners, which advises pension funds including Railpen, one of Britain’s biggest pension funds, will raise the proposals next month in Washington at the International Corporate Governance Network. It will be attended by representives from 38 countries, including institutional investors with more than $10 trillion (€5.4 trillion) in global assets. Former American vice-president Al Gore will be the main speaker at the event.