WETHERSPOONS’ colourful founder and chairman Tim Martin has hit out the “limitations of corporate governance systems” and suggested that the “colossal” financial problems faced by Britain’s banks, supermarkets and pub companies are partly the result of following governance guidelines.
Commenting as the pub chain reported a £20m slump in full-year profits, Martin took aim at the woeful state of corporate reporting among Britain’s biggest companies and the failure of company boards.
“Modern annual reports are far too long and are often almost unreadable. They are full of semi-literate business jargon, including accounting jargon, and are cluttered with badly written and incomprehensible governance reports,” Martin said.
“The limitations of corporate governance systems should be recognised. Common sense, management skills and business savvy are more important to commercial success than board structures.”
Martin’s comments echoed Simon Laffin, chairman of Flybe and the former CFO of Safeway. Speaking at the CFO Agenda in June, Laffin suggested that rules around governance had become overly prescriptive and suggested that “rules are the antithesis of good performance”.
This is not the first time that Martin has criticised UK governance rules. Last year in an article for Propel, Martin castigated reporting watchdog the FRC over the composition of its board, which he said consists “almost entirely of “City” types, with little experience of civvy street, let alone pub or supermarket companies”
Martin also used Wetherspoons’ results as an opportunity to campaign against excessive taxes levied on the pub industry.
“As we have previously stated, we believe that pubs are taxed excessively and that the government would create more jobs and receive higher levels of overall revenue, if it were to create tax equality among supermarkets, pubs and restaurants.
Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20% – and this disparity enables supermarkets to subsidise their alcoholic drinks sales to the detriment of pubs and restaurants,” he said.