Power of small shareholders is nothing but myth

When major businesses fail to perform adequately, or company directors make bad decisions while paying themselves obscene salaries and bonuses, how often have we been told it's is a matter for the shareholders to decide? This conjures a picture of thousands of ordinary people with a few hundred shares holding the board to account and voting to get rid of them in extreme cases.

However, most of us know that this often trotted-out mantra is complete nonsense, and if further proof were needed this was provided by the Lloyds TSB special meeting this week (participants pictured). From the floor, many shareholders expressed their opposition to the HBOS takeover, angrily challenging the directors on their current decisions and past performance. But - surprise, surprise - when the vote was taken, the take-over proposal received a huge 96% approval. A relatively small number of institutional shareholders cast their massive shareholdings in favour of the board's proposal, as they almost invariably do in such situations.

The same institutional shareholders will repeat the performance at the HBOS special meeting. In effect, a few hundred investment managers will decide that the takeover will go ahead. The views of many thousands of small shareholders are totally irrelevant, as are the interests of present and former staffs of the two banks, many of whom were encouraged to invest their savings in the banks' shares. It is a fallacy to pretend that the majority of individual shareholders have any say or control over the actions of the companies they think they own.

Even the non-executive directors on company boards are no help in these situations - in many cases the chairman, chief executive or finance director of one large company will be a non-executive director of several others, where their main function is to form the board's remuneration committee and to approve the excessive salaries, bonuses and share options paid to (not "earned", as the media insist on terming it) the top executives. This incestuous system needs urgent attention.

Non-executive directorships have also now become a lucrative source of employment for failed or retired politicians, so there is no chance of the government acknowledging this lack of democracy or doing anything about it. In this case, government ministers fell over themselves to support the merger by suspending the usual non-competition rules. Unfortunately, the small shareholders and the many bank employees who lose their jobs will not share in it.

Iain A D Mann, Kelvin Court, Glasgow.

I recently decided to close a credit card account, and forwarded a cheque in order to do this. Yesterday, I received a statement from the bank, showing that I was still owing them £0.01. At first I found this quite laughable, but looking further down the statement my laughter turned into disbelief and a mild sense of anger as in emboldened text and in capital letters, I read what is probably the usual rhetoric of a standard bank letter, with its highly contentious and emotive language: "You have failed to make a minimum payment. Failing to make your minimum payment can mean that you have broken the terms of this credit agreement and could result in us taking legal action against you. It could lead to your having to pay additional costs and make it more difficult for you to obtain credit in future."

Obviously, I got on the telephone straight away. And that was another story. The sad fact of the matter is that as supposedly valued customers, not only of banking institutions, we are in many instances no more than reference numbers and account numbers.

At first I decided not to forward the outstanding debt, but then being the sort of decent bloke I like to think I am, I popped not 1p but 2p in the post. However, this may incur the bank's wrath and an additional charge, for on the envelope flap it clearly states: Please do not mail cash. No staples or paper clips please.

Whether or not this monumental act of generosity on my part will help alleviate the failing fortunes of the already beleaguered HBOS remains to be seen.

Tom McDonald, 20 Forestfield, Kelso.

I wish to congratulate The Herald on the article and editorial on unjust boardroom pay and bankers' bonuses (November 19). Furthermore, should effective action not be taken, these should be made key issues in the next General Election.

Though a teenager in the swinging sixties, I have never joined a public protest in my life. I may yet be a placard-waving baby boomer. Something must be done to stem and ultimately eradicate the curious mixture of arrogance, avarice and ignorance which has led us into what is, as yet, an unfathomable crisis.

Honora Di Paola, Whitecraigs Court, Whitecraigs.