British Land and the J Sainsbury director
Corporate governance codes make much of non-executives’ independence nowadays – so it is surprising to see one of our biggest property companies putting a director of one of its biggest customers on its board.
British Land (LON:BLND) has made Dido Harding a non-executive director. As convenience director of J Sainsbury (LON:SBRY) and a former executive at Tesco, Kingfisher and Thomas Cook who started at McKinsey, she is no doubt an ideal addition to the property company’s top table – just the sort of person that the governance zealots like to engineer into Britain’s boardrooms.
Except that J Sainsbury is the property company’s biggest tenant. It provides British Land with 7 per cent of its rental income - £33m a year. Tesco pays a similar rent, making it equal with Sainsbury – but Tesco doesn’t have a director on its landlord’s board.
I remember when it was common for a board’s non-executives to include a partner in its solicitors, one of its valuers and even the auditor. But that was then – before corporate governance was invented. Now the external directors are supposed to be independent, and risk having an asterisk next to their name if they’re not. Even spending too long as a non-exec disqualifies directors from being independent.
Would J Sainsbury appoint a representative of a supplier to its board? Former Unilever and Cadbury directors are non-executives at the supermarket, but they are former, even if the Cadbury man overlapped his directorships. British Land has an ex-Tesco director as a non-exec – but again, he is ex. Ms Harding is still current at Sainsbury.
As convenience director, Ms Harding may not be negotiating rents on superstores and she sits on Sainsbury’s operating board, not its main board, but there is scope for conflict of interest. No doubt she will excuse herself if a landlord and tenant matter arises, but it is interesting how independence rules are now being interpreted.
British Land knows the rules on non-execs because Sir Derek Higgs, the man who wrote them, used to be the company’s deputy chairman. So I hope the governance police will raise no more than an eyebrow about the appointment. UK companies need a greater diversity of directors and it is encouraging that British Land has found room for her in its boardroom when Sainsbury has yet to recognise her talent at plc level.
