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The founder of JD Wetherspoon has launched an extraordinary attack on one of the pub chain’s biggest shareholders, accusing Fidelity of damaging public companies with a “box-ticking” approach to governance while breaking the rules itself.
Tim Martin lashed out at the investment giant after it opposed the reappointment of two Wetherspoon directors beyond the nine-year limit imposed by the accounting regulator’s Corporate Governance Code.
In an announcement to the stock exchange, the 66-year-old chairman complained that Fidelity’s “rigid approach” to the rule “drives a coach and horses through the ‘comply or explain’ aspect of the Code.
Mr Martin, an outspoken entrepreneur who has previously chafed against City red tape, said: "The corporate governance world needs to get its act together by eschewing a box-ticking approach or it will inevitably continue to weaken the structure of businesses which are important to the UK economy.”
He accused Fidelity of hypocrisy, alleging that the asset manager is itself in breach of governance rules including the nine-year limit in some of its subsidiaries.
Mr Martin said: “Fidelity Investments, which has over $4 trillion of assets under management, has… four directors and does not have a majority of independent directors – nor are there any dates, transparently disclosed, regarding the length of tenure of the directors.
“If major investors do not observe the rules themselves, it cannot be right to vote against directors of investee companies, especially when investees have adhered to the ‘comply or explain’ requirements.”
It comes after Institutional Shareholder Services (ISS), the influential shareholder advisory firm, recommended earlier this month that investors oppose the re-election of Debra van Gene and Sir Richard Beckett as non-executives and abstain on re-electing Mr Martin.
Fidelity Investments is Wetherspoon's 13th largest shareholder while Fidelity International, its international arm before it was spun off into a separate company, is its fifth biggest. The latter is still part-owned by members of the original Fidelity founding family.
Mr Martin said his comments applied to both companies, which share some directors and shareholders.
A spokesman for Fidelity International said Wetherspoon’s broadside included "significant misinformation" as "we are completely separate entities". Fidelity Investments did not respond at the time of writing.
"A majority of the Fidelity International Limited board members joined the board within the past nine years," a spokesman said. "We appreciate the value of having experienced members on the board with a deep knowledge of the business. We do, however, believe that there is value in having a critical mass of qualified and independent outside directors on the board".
Mr Martin has for years argued that red tape for listed firms is harming Britain, in 2019 launching a tirade against top shareholders Columbia Threadneedle and Blackrock after they also refused to support the re-election of two of his directors due to the nine-year rule.
He said: "This is creating a situation in which many UK plcs have, to their detriment, inexperienced boards. Almost no UK plcs today have any non-executive directors who were at the company in the last recession."
Wetherspoon has been criticised by shareholder advisory firms - which influence the voting decisions of many institutional investors - for the independence of non-executive directors, boardroom diversity and spending money on pro-Brexit campaigning.
Mr Martin’s comments are likely to anger the investors. One senior fund manager said: "He doesn't believe in shareholder democracy.”