Finding a chairman is musical chairs in reverse
Have we made chairing a company so hard that seats cannot be filled? There are vacancies in the centre of more than half a dozen big boardrooms but the headhunters don’t have that many names on their lists.
It is the same small circus of potential chairman who line up for each job therefore, and when they fail to get one position they appear on the shortlist fort the next. It is musical chairs – except in this game there are more chairs than people.
If John Peace is to get the chairmanship of Standard Chartered bank then he won’t get the Sainsbury job too, which eliminates another candidate while potentially creating a vacancy if he has to vacate the chair at Experian or Burberry.
The banking crisis is the cause of much of the chairmen shortage. Three big banks (plus some smaller ones) have lost their chairman because of their banks’ troubles, not only leaving empty chairs to be filled but effectively reducing the supply too – unless anyone wants the former head of Royal Bank of Scotland or HBoS. The associated creation of UKFI, the government body to hold stakes in rescued banks, means there is another chair to fill too.
Sainsbury chairman Sir Philip Hampton went to UKFI then quickly moved to RBS, leaving the government agency still seeking a permanent replacement as well as the retailer searching for a successor. Mervyn Davies swapped Standard Chartered for government and, while his time as a minister may be limited, he has so far shunned invitations to chair a rival bank.
Sir Win Bischoff has been approached by UKFI but looks likely chair Lloyds instead. Given that he was ousted by Citicorp so recently, such interest shows old bankers can return. That is good news for Sir Victor Blank, forced out of Lloyds by UKFI but perhaps suitable to return to corporate life at a retailer? Marks & Spencer is looking for a chairman as well as Sainsbury.
Niall Fitzgerald, the former Unilever chairman is available, especially now that Thomson Reuters is abandoning its London share listing, but the headhunters have few other names to offer. Other companies needing a new head include the Anglo American mining group and Legal & General, where it would be wrong to assume Dame Clara Furse, the former London Stock Exchange chief executive, will get the job.
BP turned overseas in appointing Ericsson’s CEO, Carl-Henric Svanberg, as chairman rather than take one of the usual suspects from the UK headhunters short shortlists.
Why are good chairman in such short supply? Are companies fishing from too small a gene pool or have the terms been made so onerous that few want to do the job, or few can. Pay scales – more than £500,000 at large companies with options on offer too nowadays – seem attractive.
The post-crash demand that banks are chaired by ex-bankers does not help but corporate governance codes are partly to blame for making the job harder and dictating the qualifications and restrictions. It should be obvious that is the majority of a board has to be non-executive and non-execs are former executives, there are too few full-timers to become the part-timers on tomorrow’s boards, nevermind chairmen.
Those currently rewriting the corporate governance codes should recognise the problem they have created and redress the boardroom balance.
