The Trustee Board of which I am a member has fourteen members, including the Chairman, of which seven are nominated to serve by the Sponsor and seven are elected from various member constituencies. Of the seven Company Nominated Directors four are Shell employees and three Pensioners. Of the seven Member Nominated Directors four are directly elected by the 6,600 employees in the fund and three are elected from the 38,000 Pensioner (and Deferred Pensioner) members - one indirectly and two via a ballot of all Pensioners. I mention these details to show that there is always likely to be a fair diversity of types of Trustee but also to highlight that only two of us can claim to have been chosen directly by the 85% of our Fund’s members who are pensioners – although in total six of us are pensioners and can perhaps be seen to relate closely to this community. Similarly the eight employee members perhaps naturally associate with those still in employment. In making this analysis I can hear the voices of the Pensions lawyer and the Fund’s managers over my shoulder. “You are not a delegate of the Pensioners representing them – you must at all times act in the interests of the beneficiaries as a whole”! This of course is true and forefend the thought that I should be partial to one member sub-group over another!
I have now been a Trustee for a year and can say that the Board members who are my colleagues honour to the letter their legal duty to put members interests first whatever their backgrounds and whatever “constituency” they come from. They are also collegiate with one another and whilst there are some obvious differences between, for example, the Pensioner Directors and the Employee Directors these rarely come to the surface in a negative way. It is also pleasing to see that there is no “them and us” divide between the rather senior Company Nominated employee Directors and the rest of us. I am aware that other funds are not so fortunate – one elected member of a major fund told me that he and his fellow elected members have pre-meetings before Boards to agree their position on issues and to plot together against what he called the “company apparatchiks and puppets”!
When I meet fellow Shell Pensioners at various functions I stress to them that although they elected me the law does not permit me only to argue in their interest. But I also say that, so far anyway, this has not been a problem. We have not had an issue on which a decision one way would favour employee members to the detriment of pensioner members – or vice versa - and I think that it is unlikely that we will. So generally what is in the interest of Pensioners is either also in the interest of employees or at the very least is neutral to them. Given this, and whilst I am watchful of the risks of not being even-handed, I naturally think particularly of my Pensioner constituency when matters are under discussion.
The principle that some members of Pension Fund boards should be elected is not universal and some very large Funds have Boards that only appoint and/or select their members. In my opinion if we are privileged to live in a country which has a pluralist, democratic system then election of those that govern us is a sine qua non. I would not argue that all Trustees should be elected or that those who are chosen by their peers have greater legitimacy than those who have been selected (or those for whom being a Trustee comes with their job). The key to having a successful Trustee Board is to have diversity and openness of discourse. Unlike in the formal business environment from which most Board members come there is far less hierarchy and a far greater need to reach a consensus than in a world in which the buck stops with the man in charge. So whilst elections for positions in businesses would be inconceivable elections to Trustee boards seems at the very least highly desirable. In any enterprise creative tension is healthy and I see no reason why behind the closed doors of a Trustee Board meeting there shouldn’t always be frank and fearless exchanges of views. That is more likely to come if some of the Board members have been chosen by their peers.
Paddy Briggs is a Member Nominated Trustee Director of the Shell Contributory Pension Fund. He writes in a personal capacity and the views he expresses are his own.
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