Skin in the game
As well as improvements in diversity, the Investec Securities research also praised those board directors and managers who were putting their own 'real skin in the game' and aligning investors' interests to their own through significant shareholdings.
According to the latest report, there was a total of £4.2bn personal investment made by boards and managers, but the authors stated: "While this reported has highlighted real progress on several fronts, a significant majority of managers are still unwilling or unable to disclose 'skin in the game'."
While there is no regulatory requirement for managers to do so, the authors called it "disappointing" that this was the case.
Of those who have disclosed, the report acknowledged the "remarkable" shareholding of Bill Ackman and the rest of the management team of Pershing Square Holdings.
This total shareholding is £1.37bn, which the authors called a "show of confidence".
Other known managers with more than £1mn personal investments include:
- Christopher Mills, who is a director of and manages both the Oryx International Growth Fund and the North Atlantic Smaller Companies trust, has put his own money to work in both companies
- Nick Train and Alistair Smith, who have £45.2mn in the Finsbury Growth & Income Fund
- Simon Edelsten, who recently announced his retirement from fund management group Artemis, who has a sizeable £16.5mn of his own money in Mid Wynd International.
Directors
Overall there were 53 chairs or directors with a personal investment of over £1mn as at May 31, 2023, including Paul Pindar, founder of Literacy Capital, and Richard Pindar, chief executive of the family-owned Literacy Capital, Paul Read, manager of Personal Assets, and John Duffield New Star Investment Trust.
Michael Lindsell, of Lindsell Train, has just over £7.9mn in the trust.
Overall, four of the Literacy Capital directors have put a lot of their skin into the game.
The Rothschild family investment have a total of £549mn invested in RIT Capital Partners.
Only one of the 53 directors with a £1mn-plus investment is a woman: Jane Tuffnell, of the Odyssean Investment Trust, with a holding of £1.08mn
There were 15 company boards where no chairpersons had personal investments in the trust, and 11 of these trusts had chairpeople who had not made any personal investment in the past 10 years.
Brodie-Smith added: “It’s always reassuring to see board directors and managers with a stake in their own investment companies, and the ‘skin in the game’ report makes fascinating reading as ever.
"Understandably, shareholders want to see the interests of the board and manager are aligned with their own, and substantial personal holdings are one way to signal this alignment."
However, she pointed out that it is important to recognise that directors’ financial circumstances can be different.
Therefore, she said "insisting that everyone has skin in the game isn’t appropriate if it gets in the way of appointing people from a wider range of backgrounds".
