Greg Wright: It's time the small shareholder's ally made more of a noise

If you believe the answer is "yes", you will welcome the recent bolshy behaviour at many company AGMs.

During the boom times, too many corporate accounts with eye-watering financial packages for the top brass were rubber-stamped without a murmur of dissent.

Those days are gone, and corporate governance should be better for it.

But we shouldn't delude ourselves. Small shareholders may scream and shout, but there are still formidable forces ranged against them.

They can embarrass the board with complaints about pay scales that defy common sense and financial gravity.

However, shareholders rarely force a CEO to take a pay cut. In fact, shareholder revolts rarely lead to even a modest reduction in the corporate pay package.

In recent weeks, Marks & Spencer managed to win support from shareholders for its executive pay plans, despite criticism about the 15m pay package that could be awarded to new chief executive Marc Bolland.

Just over 16 per cent of shareholders expressed their opposition to the executive pay plans, with 7.9 per cent opposing and 8.3 per cent abstaining.

Tesco saw 47 per cent of its investors either voting against or abstaining over its remuneration policy at its annual meeting earlier this month.

One of the most controversial AGMs was held in May when more than two thirds of shareholders of Sheffield-based insulation group SIG voted against the remuneration report.

It's hardly surprising that the vast majority of disgruntled small shareholders decide not to speak out at AGMs. They might generate a few paragraphs of sympathetic press coverage, but they know their battles will be fought in vain.

Too frequently, the reward for executive failure is a fat pay packet or a generous pay off. The small shareholders, by contrast, can be left with virtually nothing.

What they need are allies with real clout. In other words, the institutional investors.

Institutional shareholders are being given a much-needed prod by a new Stewardship Code, which aims to ensure the excesses of the late noughties are never repeated.

The code encourages big shareholders to start looking under the bonnet to find out how well UK PLCs are being run. It has been devised by the independent regulator, the Financial Reporting Council (FRC).

The code says institutional investors should do more to monitor the firms they hold shares in, and intervene when they believe things are going wrong.

The code contains an inherent rebuke. It was devised following criticism that large shareholders failed to control the risky behaviour that caused the credit crisis.

According to the code, institutional investors should attend the general meetings of companies in which they have a major holding and meet board members to ensure their "governance structures" – or management systems – are effective.

This sounds like common sense to me.

The code encourages investors to express concern if a company does not stick to the UK Corporate Governance Code. This is a significant step.

The Corporate Governance Code, published last month by the FRC, sets out standards aimed at increasing the accountability of company boards. It increases pressure on the board to keep executive pay under control.

The code, recommended by City grandee David Walker following his review of corporate governance in the financial sector, also says institutional investors should take collective action with other investors where appropriate.

This opens the door for collaborative action with small shareholders who want to rebel against corporate waste and greed.

The Stewardship Code affects all of us. It is aimed at firms who manage assets on behalf of institutional shareholders such as pension funds. So if you're planning to retire, you'll be hoping it proves effective.

Sadly, the code isn't legally binding – it operates on a "comply or explain" basis.This means that institutional investors have to give a reason for not following it. From the end of September, you'll be able to see which institutional investors are following the code by visiting the FRC website – www.frc.org.uk.

The days when major investors were branded "absentee landlords" may be coming to an end.