Shareholder revolts gather pace
Weir Group voted down on pay policy
Schroders shareholders vent frustration
Shire investors fail to support chief executive’s rise
Earlier:
US GDP shows sharp slowdown
Economists: America in trickier water
Sajid Javid: I should have flown to Mumbai for steel talks
6.07pm BST
It’s been a packed day of frustrated shareholders and gloomy economic news.
Before we go here’s a summary of the main business stories:
5.08pm BST
Following the upset at Weir’s AGM, the engineering company’s chairman, Charles Berry, has issued a statement (which, in a sign they are not letting earlier hopes go, contains quite a lot of “would haves”).
Here’s an extract from the statement (with my bolding up of some key points):
“The Board are pleased that shareholders have endorsed the vast majority of resolutions at today’s Annual General Meeting. The Group’s resolution on the Directors’ Remuneration Policy did not gain sufficient support and will not now proceed. During an extensive consultation period, the Board had tried to forge a consensus between different shareholder views.
“The Group’s proposed policy would have offered senior management greater stability through the introduction of restricted stock awards in return for a substantial reduction in the maximum award available to the most senior Executive Director from 250% of salary to 165%. Restricted stock awards do not come with direct performance criteria but closely align senior management incentives with shareholder interests, as their value is dependent on share price performance, with the award taking five years to fully vest. In addition, the Remuneration Committee would have had the power to claw back restricted awards if necessary.
4.53pm BST
Some late, breaking AGM news now and the shareholder spring is in full flow with a big upset for engineering group Weir.
There was a 72.4% vote against Weir’s remuneration policy.
And so the shareholder protests continue: Engineering company Weir gets a 72.4% vote against the remuneration policy
Weir says it will continue to operate under the remuneration policy which was approved by shareholders in 2014
4.45pm BST
On financial markets, London shares have managed to claw back some ground this afternoon and the FTSE 100 erased early losses to finish virtually unchanged on the day.
The London bluechips index is 2.5 points higher at 6,322.40. It had earlier dropped sharply as markets around the world were dragged lower on disappointment at the Japanese central bank’s decision not to come up with any fresh stimulus measures.
4.35pm BST
Another FTSE 100 company -building materials business CRH - has also had a protest over pay, this time a binding vote over policy.
Jill Treanor reports that just over 40% of shareholders voted against the new pay policy - which covers the next three years - and which increases the chief executive’s pay potential by 50%.
4.13pm BST
Back to AGM showdowns now and my colleague Julia Kollewe has been at the Schroders AGM today, where shareholders registered their frustration with the elevation of former chief executive Michael Dobson, who ran the investment firm for more than 14 years, to chairman.
Nearly 15% voted against Dobson’s re-election, and almost 12% voted against Lord Howard of Penrith, the senior independent director who oversaw the move.
Hermes, which represents pension funds and had urged other investors to oppose Dobson’s promotion, voted against both.
3.57pm BST
There have been fresh developments in the BHS story this afternoon.
We've launched our inquiry looking into the sale and acquisition of #BHS. Find out more about the inquiry: https://t.co/g54k9Lp4AC
The Commons Business, Innovation and Skills (BIS) select committee has announced it will explore the sale and acquisition of BHS, including whether the directors of Green’s Arcadia and Retail Acquisitions acted as best they could to fulfil their statutory duties.
BHS called in administrators on Monday, putting almost 11,000 jobs at risk. The retailer was owned by Green for 15 years until he sold it for £1 last March to Retail Acquisitions, a consortium of little-known accountants and lawyers led by Chappell.
Related: BHS collapse: Sir Philip Green may face grilling by MPs
3.42pm BST
In US company news, Disney will have to size up to a formidable rival after confirmation from Comcast’s NBCUniversal that it has lined up a $3.8bn deal to buy DreamWorks Animation, maker of hits from Shrek to Kung Fu Panda.
Related: Comcast’s NBCUniversal to buy DreamWorks Animation in $3.8bn deal
3.27pm BST
Back with the main economic story of the afternoon, the sharp slowdown in US GDP growth in the first quarter, as reported earlier, forms part of a worrying global trend, in the eyes of our economics editor Larry Elliott.
Central bankers around the world are getting diminishing returns on their actions and all the major economies are expanding more weakly than they were in the middle of last year.
The global economy is running out of steam and the conventional weapons are increasingly ineffective. This is not about blizzards shutting factories in Michigan. It goes much deeper than that,” writes Larry.
Related: Sluggish US growth forms part of a worrying global trend
3.19pm BST
Sticking with UK news for a moment, Jill Treanor and Julia Kollewe have been following shareholder rebellions over pay today.
They have more details on the majority of investors at Shire pharmaceuticals failing to support a 25% pay rise for its chief executive, Flemming Ørnskov. The report continues:
The increase in his salary to $1.7m (£1.2m) means Ørnskov’s bonuses are also going up, a move which shareholders had been urged to protest against before the annual meeting on Thursday.
The advisory pay vote squeezed through, as holders of 50.5% of the shares in the Dublin-based but London-listed FTSE 100 company voted in favour – but if deliberate abstentions were included, support for the board fell just below 50%.
Related: Shareholder rebellions gather pace with Shire pay revolt
3.11pm BST
Bank of England governor Mark Carney has been in Stockport this week and talking about the EU referendum again.
Growth appears to be slowing ahead of June’s vote, said Carney, who has previously warned that Britain’s economy could struggle to grow after a decision to quit the European Union. The referendum itself posed a significant risk to the economy, the Canadian said.
#BankofEngland Governer Mark Carney in #Stockport to talk potential #Brexit and beer https://t.co/siGlflCLhC pic.twitter.com/o04nVLW6ky
2.36pm BST
In other UK news... the business select committee has launched a full inquiry into the collapse of high street chain BHS.
They will investigate the sale of the business by Sir Philip Green for £1 last year, what due diligence was done by the buyers, and whether the taxpayer is now on the hook for BHS’s pension bill.
“The collapse of BHS brings misery and uncertainty for thousands of workers and also places a potentially significant burden on the taxpayer in the form of pension liabilities.
The sale and acquisition of BHS raises real questions about whether directors acted in the best long-term interests of the company and their employees. Is there too much of an incentive in the system for owners to asset-strip, take out vast sums for personal gain, and then dump and run leaving the taxpayer to pick up the tab when the company fails, rather than create value for the long-term?
2.29pm BST
Back in the UK, Royal Bank of Scotland has admitted that it will probably fail to sell its Williams & Glyn division by the end of next year.
It has just warned that City that it will probably miss a deadline of the end of 2017 to offload more than 300 branches, due to the complexity of separating customers from the rest of RBS.
2.09pm BST
This is the third year running in which US growth has been alarmingly weak in the January-March quarter.
US Q1 GDP +0.5%. That's annualized, so economy virtually ground to a halt. GDP trend pretty clear in last two years: pic.twitter.com/xYVAAnHcmp
2.05pm BST
There’s no chance of the US central bank raising interest rates while growth is so weak, argues Tom Floyd of Foenix Partners.
According to Floyd, Americans can stop worrying that interest rates might rise in June.
Despite the Fed’s best efforts to leave the door open for a hike at the next meeting, today’s GDP data risks blowing it firmly shut. The data, showing a rise of just 0.5% in the first quarter versus expectations of a rise of 0.7%, undermines the more hawkish Fed tone from last night and does little to justify an imminent raise.
Although the Fed dropped language acknowledging global risks it is worth noting the next meeting is only 8 days before the next major global risk event, the Brexit vote.
1.57pm BST
Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management, is also concerned by the slowdown in US growth:
“The US economy hasn’t run aground by any means, but it is navigating more difficult domestic waters than three months ago. Growth has been weighed down by weak performances in the manufacturing and energy sectors due to the strong dollar and volatile oil prices. On top of this, consumer confidence has been knocked recently, impacting retail sales.
“Although today’s results clearly indicate a slowdown in growth, it’s important to remember that the US economy has still expanded. The labour market is in reasonably good shape, and global risks seem to be slightly more muted than at the start of the year. This will help support domestic momentum as the year progresses.
1.57pm BST
Paul Sommerville of Sommerville Advisory Markets says an annualised growth rate of 0.5% is ‘woeful’.
1.50pm BST
This is America’s weakest quarterly growth rate in almost two years:
Q1 keeps up its 'low-growth' reputation. US #GDP growth in Q1 +0.5% annualized, below expectations. pic.twitter.com/K87sDaTR40
1.36pm BST
Breaking news from America: The US economy has barely grown at all in the last three months.
U.S. GDP +0.5%. Business spending down 5.9%, the biggest drop since the waning days of the recession.
1.08pm BST
Here’s Graham Ruddick’s early story about this morning’s session, in which Tata Steel’s UK boss warned of ‘disaster’ looming unless a deal is reached.
Related: Tata Steel UK boss warns of pension timebomb if buyer not found
12.30pm BST
Sajid Javid has been spoken of as a future prime minister. Even Forbes Magazine got in on the act, saying it would be a cheering rags-to-riches story if Javid got the keys to Number 10.
But his hopes of a glittering career are now tightly bound with the future of Britain’s steel industry. Today’s session showed us that:
11.58am BST
Q: Finally, what can you do to reassure customers and suppliers to keep working with Tata steel at this time?
11.53am BST
Q: If a potential buyer says it needs nine months to agree a deal, but Tata insist on a quick deal, would you step in with a bridging loan?
I’m not going to rule anything out, Javid replies, but the focus is to find a commercial operator quickly.
11.49am BST
Q: Unions have told us they would favour scrapping the lesser duty rule, in favour of a new solution just for the steel sector. Is this under consideration?
Javid says he still supports the lesser duty rule [this is the rule that prevents higher tariffs being imposed on Chinese steel]
11.41am BST
MPs are questioning whether Sajid Javid is really doing enough to help the steel industry.
I will do everything in my power to help, but I cannot influence the price of steel, says Javid
Javid wants speed of action in trade defence and tariffs?! Why was he blocking tariff increases at an EU council level then?
11.35am BST
Q: What is your working assumption about the pension liabilities, if there is a successful sale?
Javid says commercial sensitivities prevent him saying too much.
Most positive comments by Javid, is his view re: BSPS and pensions issue not being insurmountable. That is positive.
11.31am BST
Q: What top three lessons can we learn from the Scottish government’s deal to save two Tata steel plants?
Javid says it’s hard to learn lessons - given the Scottish plans were steel mills (recycling steel) rather than a blast furnace (which makes new metal). And it only involved 300 jobs.
11.26am BST
The committee aren’t impressed with Javid’s claims that Britain is getting better at using home-smelted steel for big government contracts.
They point out that the Minister for Defence Procurement has admitted he doesn’t have the full records of where it sourced its steel from (details).
11.20am BST
Compared to his BIS predecessors Lord Mandelson and Vince Cable, Javid comes across as notably detached from industry and its views
11.19am BST
Q: Why hasn’t the government moved faster to change procurement rules to use more UK steel in infrastructure projects?
Javid says the government needed to ensure the changes were legally watertight. Changes are being made, and they will make a difference.
11.18am BST
Javid has been accused of misleading the committee over SSI Redcar, by Labour MP Tom Blenkinsop, who represents Middlesbrough South and East Cleveland.
Javid saying there wasn't a single buyer for SSI last autumn, is just a flat out lie.
Javid has just come out with the £80m figure again which just another LIE!
11.17am BST
The committee asks why Javid allowed the steel works at Redcar to close last autumn.
Q: Why did you rejecting an offer from one company to keep the coke ovens open, and “shut the door rapidly” on negotiations?
We’ve lost those skills from the steel industry for ever.....
And an absolute disgrace that it was allowed to happened on your watch.
11.08am BST
Q: Anna Soubry says she heard about Tata’s plans via Twitter. You were on the other side of the world - how can you claim you were in control?
Javid reiterates that commercial sensitivity stopped the government from saying more.
MPs on BIS committee say Sajid Javid has given impression during steel crisis that he is not in control of situation, he is denying this
11.06am BST
Q: The government has given some very mixed messages - first saying that nationalisation was off the table, but now offering to do whatever it takes.
Do you accept you have been on the back foot throughout this crisis?
Rarely is nationalisation a solution - the best companies are in private hands.
11.02am BST
Javid’s decision to fly to Australia last month, not Mumbai, is particularly sensitive as he also took his teenage daughter along.
Javid says ministers 'have to be ready to turn back' when they are on trade missions (even to Australia with daughter in tow)
10.58am BST
Javid is asked about his dislike of "industrial strategy". He replies that manufacturing declined from 18% to 10% of GDP under Labour.
10.58am BST
Q: Businesses complain about the lack of a level playing field, so what can be done to help firms compete with German firms?
Javid says that more needs to be done on energy costs -- an issue which Tata UK raised earlier in this session.
10.55am BST
Some early reaction to Javid’s testimony:
Sajid Javid seems to be getting into a tangle. Admits he knew Tata was considering closing Port Talbot, but not clear why not in Mumbai
Javid admits that "with benefit of hindsight" he would have gone to Mumbai for Tata board meeting last month
10.54am BST
Q: If you could turn the clock back a month, would you have attended that meeting in Mumbai rather than going to Australia?
Of course, says Sajid Jabid. With the benefit of hindsight, knowing what Tata would say and how it would be reported.
10.52am BST
Q: Isn’t the truth that you were blindsided by Tata, which is why you set off to Australia leaving no-one in London who could deal with this crisis?
No, Javid insists. Tata is a large global business, so people in every management layer don’t always have all the information about what’s happening.
10.46am BST
Q: So when the Tata board met in Mumbai in late March, were you convinced that they had dropped the idea of complete closure and were looking for a buyer?
Yes, says Javid.
10.42am BST
Sajid Javid has arrived, flanked by two senior officials.
10.34am BST
Reminder, you can watch today’s hearing here.
10.32am BST
We should hear from the business secretary in a moment....
Sajid Javid up next at @CommonsBIS let's hope he's asked by @IainWrightMP et al whether his decision to fly to Australia was a mistake...
10.30am BST
That’s the end of the session with Bimlendra Jha, so what did MPs learn from the Tata UK boss?
10.07am BST
Q: What can be done to remove uncertainty and help solve this crisis?
This uncertainty is exactly why we need an accelerated timescale for this sale, says Bimlendra Jha.
10.01am BST
Q: What happens to Tata UK’s pension liabilities if Port Talbot closes or is sold?
The number of contributors goes down by 4,700, Jha replies, so the burden increases and the scheme becomes weaker.
10.00am BST
Bimlendra Jha then gives MPs a lesson in running a manufacturing giant in the 21st century.
UK manufacturing is in decline, and when we hurt ourselves with high energy costs or business rates you hurt the whole industry. And when a firm can easily move over the Channel and buy energy cheaper, the situation quickly worsens.
@graemewearden Javid and his Government's part they played with the ever increasing business rates burden for Tata. pic.twitter.com/irXDmKr09m
9.55am BST
Q: We’ve heard a lot about pensions liabilities at BHS this week, but those liabilities would be dwarfed by Tata Steel’s liabilities. What consideration have you taken about potential liabilities to the UK taxpayer?
We need to be aware that if this pension fund liability is not taken care of, there is no buyer sitting out there to buy this business, CEO Jha replies.
I don’t know what arithmetic has been done on the economic and social consequences of that kind of disaster....
9.40am BST
Q: Do all communications between Tata and the UK government go through you, Mr Jha?
No, replies Jha (who took over as CEO earlier this month)
There are serious question marks about the viability of Port Talbot.
TATA STEEL UK CEO JHA SAYS SERIOUS QUESTION MARKS OVER VIABILITY OF PORT TALBOT STEEL PLANT
9.37am BST
Q: Does Tata believe the UK government is open to buying British steel for infrastructure projects?
Marc Meyohas of Greybull Capital says the government is open to dialogue on this issue, and it’s crucial that this dialogue delivers results.
9.35am BST
Q: How long have you been talking intensively with the UK government?
We have been talking to the government on a daily basis for months, Bimlendra Jha says. There is now also a team from Tata’s in
9.30am BST
The commitee turn to Marc Meyohas of Greybull Capital, which is funding a management buyout of Tata’s site in Scunthorpe.
We are confident that the management plan to turn Scunthorpe around will work, says Meyohas.
9.27am BST
There is great sadness that we are leaving the UK, Jha concludes, but we must be responsible to our shareholders too.
9.26am BST
Q: Is the government doing enough?
Tata UK CEO Bimlendra Jha says there is a growing awareness that more needs to be done, such as on energy costs.
We have taken all the hit, all the time.
9.21am BST
Q: What is the timescale for a sale?
There is no deaddrop time, but given the losses, urgency is important as we can’t continue to bleed money.
What if no buyer emerges? We cannot continue to bleed.
9.18am BST
Iain Wright asks why Tata has asked potential buyers to submit offers by next week. Why is the timescale so short?
Our world reknown advisors believe this is a liberal timescale compared to what administrators would do, says Bimlendra Jha.
9.17am BST
Iain Wright, committee chairman, begins by asking Bimlendra Jha when Tata first began considering closing its UK steel operations rather than selling it.
We haven’t said we are planning to close it, Jha replies.
9.12am BST
The hearing on the Steel Industry is starting now, the Grimond Room of the House of Commons.
The first witnesses are Bimlendra Jha, CEO of Tata Steel UK, and Marc Meyohas, partner of Greybull Capital.
9.03am BST
A month ago, the crisis in Britain’s steel industry appeared to be career-defining for Sajid Javid. Not in a good way, either.
Famously, the business secretary jetted off to a trip to Australia just as Tata’s board took the momentous decision to sell all its UK operations.
8.41am BST
Today’s steel hearing comes two days after prime minister David Cameron visited Tata’s main blast furnace on the south coast of Wales:
Prime Minister David Cameron visited the Tata Steel works in Port Talbot, South Wales, on Tuesday to assure workers, unions and bosses of the Government’s commitment to support the future of steel-making at the under-threat plant.
Unions welcomed the recent offer of state support for potential buyers, but stressed that any action must cover plants across the whole country and not just in Wales.
8.30am BST
European stock markets have been dragged down by disappointment that the Bank of Japan didn’t unleash more stimulus today.
In London, the FTSE 100 has shed 40 points or 0.6%, and there are similar losses in Paris and Frankfurt.
London equities have been rattled in early trade with the shock news that the Bank of Japan offered no further stimulus being seen as a key factor in driving sentiment.
8.14am BST
Britain’s investors have a great chance to protest against excessive boardroom pay today.
No fewer than 26 companies are holding annual general meetings today, and there could be revolts against remuneration policies at several major companies including drugs firm Shire Pharmaceuticals, and engineering group Weir.
The votes on pay at Shire Pharmaceuticals, CRH (a building materials business) and Weir are expected to be tight, especially at Shire – where chief executive Flemming Ørnskov is receiving a 25% rise in his salary to $1.7m (£1.2m).
Related: FTSE companies prepare for executive pay showdowns
8.04am BST
Investors in Japan are nursing heavy losses today after the country’s central bank defied expectations of yet more stimulus measures.
The main Japanese stock index, the Nikkei, has slumped by 3.6% and the yen has soared against the US dollar.
USD/JPY plunges >3 big figures on BOJ's no move, the biggest fall since Aug and third biggest since 2008-09 crisis pic.twitter.com/t8nboTGoel
Central banks re QE, alternating: "It's not working. We must do more of it!" "It's not working. We must do less of it!"
7.46am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The future of Britain’s steel industry is under scrutiny today, as MPs investigate efforts to save tens of thousands of jobs at Tata’s operations across the UK.
Related: Sajid Javid to face MPs over crisis in UK steel industry
Related: Tusk rejects Tsipras request for EU summit on Greece bailout
Continue reading...