Santander is taken to task over standards of
corporate governance
The Sunday Telegraph 30 May 2005
Banco Santander, the Spanish bank that bought Abbey National, the UK
group, for £9.6bn last year, has been slammed for failing to adhere to
British standards of corporate governance.
The damning report by Manifest, the proxy voting agency,
is likely to prompt protests by former Abbey National shareholders when
Santander holds its annual meeting next month.
The report attacks what it claims are lavish five-year
service contracts for Santander's executive directors. It also questions
the independence of half of Abbey's 16 non-executive directors, including
Lord Burns, the former senior Treasury civil servant and chairman of Abbey
National who is set to become chairman of Marks & Spencer next year.
Sarah Wilson, the managing director of Manifest, said: "Santander's
corporate governance is completely at odds the with gold-plated standards
of corporate governance British shareholders are used to dealing with.
This will be a real clash of cultures."
Manifest has flagged up the service contracts of
Santander's directors as a particular concern. Executive directors can
receive payments equivalent to up to five times their annual salary if
they lose their jobs. Executive service contracts of more than one year
are now rare in the UK.
Ten per cent of Abbey's 1.8m share-holders sold their
shares before the deal completed, but the vast majority received one
Santander share and 31p in cash for each Abbey share.
An estimated 1.5m British former Abbey investors will
have an opportunity to vote ahead of Santander's annual meeting on June
17.
Manifest is also concerned by the strong presence of the
Botin family on Santander's board, even though it owns only 2.8 per cent
of the company. Three members of the 20-strong board are the children of
Emilio Botin, the 70-year-old chairman of the bank.
The report also raises concerns about the independence of
non--executive directors on the boards of other financial services
companies. Antonio Gracia-Tunon is the chairman of Union Fenosa, a
financial group in which Santander owns a 22 per cent stake.
The report criticises Santander for regarding Rodrigo
Gordillo, a former chief executive, as an independent non-executive
director. Manifest also questions the independence of Burns, because he is
currently chairman of Abbey National.
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