Aberdeen's Gilbert welcomes Cox review: Consensus needed on long-termism
Aberdeen Asset Management co-founder and chief executive Martin Gilbert has welcomed Sir George Cox’s independent review on short-termism within British business.
Commenting on Sir George’s year-long review, published today, Gilbert agreed with the findings that promoted long-term development in British businesses.
“Business expansion cannot be achieved over a couple of quarters. The returns generated from that investment flow through over years, not months,” says Gilbert, who is keen to see stronger incentives aimed at both investors and managers who take a longer-term view.
Gilbert placed frequent policy changes from successive governments at fault for not encouraging long-term development.
Gilbert says: “It’s time for a political consensus to support the overriding objective that the equity investment chain should be to create long-term value in companies and long-term returns for savers.”
Commissioned for the Labour Party, Sir George’s report also recommended changes on executive’s pay for them to become based on longer-term results.
Sir George concluded that pressure to deliver quick results instead of longer-term development had “become an entrenched feature of the UK business environment”.
Though supported by Gilbert and shadow chancellor Ed Balls, the CBI has been more cautious - specifically warning that Sir George’s pay recommendations are a matter for firms and not for the government.