Wetherspoon boss Martin rants about something other than Brexit – and may even have made a point or two

What’s this: a JD Wetherspoon trading update without a Tim Martin rant about Brexit? And one that has some interesting points to make? I know I didn’t drink anything last night. I must be still asleep. Would someone please pinch me?

Ouch! Right. Let’s look again.

There’s the obligatory couple of paragraphs on the company’s performance (sales were up, we’re going to open some new pubs) then there’s the executive chair’s rant. So far so familiar.

But… it’s not about Brexit. Instead, it’s a piece headlined “Corporate governance (and guaranteed eventual destruction)”.

Before we ask why Tim thinks we’re all doomed, doomed I tell you, a bit of background.

Pirc, the governance adviser, has recommended investors vote against approving the Wetherspoon financial statements citing its spending on the now infamous Brexit beer mats, among other things, as well as its view that the pub group’s sustainability policies are “inadequate”.

It has also called for a vote against Martin’s re-election as executive chair (Pirc thinks chairs should be independent non-executive directors in common with Britain’s governance guidelines) and two of the group’s non-executive directors who have served more than nine years.

The company has also had trouble with some of its big investors on governance issues, a point referenced by Martin in his piece.

In it, he rails against the rules saying, among other things, that they give too much power to non-executive directors and shareholders, “disenfranchising executives and the workforce – the people who have real expertise and are the cornerstone of business success”.

He also attacks “the vast gap between the technocrats who make the rules and commercial reality”, which he says “is illustrated by the 2016 CG (corporate governance) code, which refers to shareholders 64 times, employees three times and customers not at all”.

Now, regardless of Martin’s motivations (he’s clearly been nettled by Pirc), he has some interesting points to make amid the bluster.

The code’s focus on shareholders at the expense of other stakeholders, such as customers and workers, is certainly problematic. It’s a point I’ve often made.

But it’s hard to take Martin making it seriously given the issues raised by ’Spoons workers about their pay and conditions.

“Like a lot of hospitality jobs, work at Wetherspoon is, in my opinion, underpaid and undervalued.”

That was the view of one of the company’s employees, who wrote about their experiences working for the company for The Independent earlier this year.

They also objected to having to distribute the firm’s Brexit propaganda. There is a “’Spoons Workers Against Brexit” Twitter feed. So it seems that they’re not alone.

Perhaps Martin could address this by letting his workers, including those on zero-hours contracts, vote for an employee director to join him on the board?

I know Pirc wouldn’t mind. To the contrary.

He goes on to criticise what he sees is the lack of experience among non-executive directors (NEDs), who are theoretically limited to nine years service under the UK’s governance code (although Wetherspoon can get around this through the code’s concept of comply or explain so long as investors approve). He references the failure of banks and other companies where a lack of experience among their NEDs was an issue that emerged in the aftermath.

The nine-year rule was designed to prevent non-executive directors from becoming too much a part of the furniture, and (potentially) losing their independence as a result.

But sure, it’s fair to debate whether having a few more longer serving ones might be beneficial or not.

I think better, more experienced NEDs, with more clout and power, might have helped a great deal at, say, HBOS or Carillion, the failures of which Martin cites.

By all means, let’s have a debate. It’s a good one and Tim Martin would be a welcome contributor to it even when he’s wrong, (and I think he is on most of the points he makes).

He’s also free to opine on Brexit. But the point about what he’s been doing with Wetherspoon, and Pirc’s issues with the company spending money on it, is that Wetherspoon has its stock market listing as a result of it raising money from the public.

Corporate governance rules are necessary to ensure the public’s interests are protected.

Martin’s use of pubic company funds to promote a cause that’s dear to his heart is questionable on those grounds, which is why Pirc has raised the issue.

He should recognise that, particularly if wants to be taken seriously in a debate about governance.

I doubt he will though.

PS: Brexit does make an appearance at the bottom of the Wetherspoon statement (Martin cheers for no deal). But then you knew it would.