Poacher turns gamekeeper

Peter Montagnon, the director of investment affairs at the Association of
British Insurers, is to ditch his post with the country’s biggest investor lobby
group and switch to the regulatory side by joining the Financial Reporting
Council.

What’s happened?

Montagnon is the voice of investors. There are few weeks or big business
issues that pass without him being quoted in the national press. But he is to
leave his post of ten years at the ABI to join the FRC as its brand new senior
investment adviser.

This is the first time the FRC has appointed someone in such a role and a
spokesman for the watchdog admitted there could be few people qualified like
Montagnon to take on the post.

The job is connected to the FRC’s responsibility for supervising the new
Stewardship Code, which is supposed to persuade investors to take an interest in
the governance of the companies in which they hold a stake.

In truth, we should not be too surprised by Montagnon’s appointment. Coming
from the ABI, he would have worked closely with Stephen Haddrill, the FRC’s
chief executive, who was director general of the insurers’ body until his
departure last year.

What happens next?

Montagnon being Montagnon, we can expect him to start by ensuring he appears
in the press as quickly as possible on the key issues behind the new code.

This is familiar ground. In addition to being quoted widely, he was also once
head of the Lex section at the Financial Times.

Most recently he has focused on executive pay. When Lloyds Bank announced
bumper bonuses for its board members, Montagnon told The Times: “There is some
residual concern among some shareholders in the way the remuneration committee
made its decision on bonuses.”

When investors voted against the pay-off for the former chief executive of
the property group Grainger, Montagnon said it was “impossible” for them “to see
how the figure for such a large payment was arrived at.”

He has headed an attack on Lord Myners for the government’s policy on taxing
bankers and, in the wake of the Kraft acquisition of Cadbury, he took on no less
a figure than business secretary Peter Mandelson when the cabinet minister
floated a plan to make it harder for foreign companies to buy UK institutions.

He fired off a letter saying the ABI could not accept measures that would be
protectionist or would encourage “complacency” in the boardroom. “The simple
point is that a person who is in a position to control more than 50% of the
votes controls the company. At that point the game is over,” he wrote.

In his new job, based in Aldwych in London, Montagnon will have to shift his
focus. Instead of talking up the interests of investors he will be persuading
them to have a more long-term interest in their investments.

That might place him, at times, at odds with the people he knows well and
once represented. This will take some smart calibration of his public comments,
which should make them all the more interesting to watch out for. Get it wrong
and he may just alienate the very people he needs to have onside.