Monthly Archives: October 2012

Andrew Hill

Ian King and Dick Olver, respectively chief executive and chairman of BAE Systems, are in for a rough ride now the planned deal with EADS has collapsed. When merger plans fall through, the people in the top jobs are always vulnerable. But recent experience suggests Mr King’s future is more secure than Mr Olver’s.

Take a look at a handful of recent abortive transactions – G4S’s takeover of ISS in the support services sector, the tie-up between miners BHP Billiton and Rio Tinto (or, if you prefer, the uncompleted deal between Rio Tinto and Chinalco), the proposed merger of Prudential, the UK insurer, and AIA. The chief executives of all the companies involved are still in position, even though some (Nick Buckles of G4S, I’m talking about you) have suffered further setbacks since their favourite tie-ups unravelled. Read more

Jeff Bezos is on a mission to seek out and destroy military metaphors at work. “You ‘target’ your customers,” Amazon’s chief executive told an audience in New York last year. “I’m, like, what? Why would you do that? That doesn’t make any sense.”

Andrew Hill

US national security concerns apart, China’s Huawei has one of the strangest governance structures of any multinational company: a “panel” of three chief executives each of whom rotates into the top executive role every six months.

On the issue of Huawei’s links with the Chinese military, the telecommunications equipment company has proved the equal of any western counterpart when it comes to using spin-doctors to push out a strong and consistent message that it has been maligned. But when it comes to the rotating CEOs, its founder, Ren Zhengfei (who is one of the trio), is remarkably frank that the arrangement is a bold experiment. “Even if we fail, we will not regret our choice because we have blazed a new trail,” he said in the most recent annual reportRead more

John Gapper

The takeover of BAE Systems by EADS to create the biggest European civil and defence aerospace company was always a hard sell to its political and financial shareholders. It is starting to look out of reach.

The latest opponent is Invesco Perpetual, which owns more than 13 per cent of BAE and thinks, to paraphrase, that the company is a deal-junkie that ought to run its business better rather than seeking salvation through M&A. Read more

Andrew Hill

The contrast between the rhetoric of James Gorman, chief executive of Morgan Stanley, and that of his Barclays counterpart Antony Jenkins – in interviews with, respectively, the FT and the BBC – underlines differing attitudes to the future of banking in the US and Europe.

In remarks squarely addressed to shareholders, Mr Gorman suggests jobs must be cut and pay curbed at Morgan Stanley; Mr Jenkins’ comments, on the other hand, are aimed directly at regulators, politicians and the general public.

That’s partly down to context – the BBC interview was filmed during a visit by the new Barclays chief executive to a UK glass manufacturer, part of Barclays’ campaign to show it is helping customers to export more. Here’s Mr Jenkins:

Barclays has a significant job to rebuild trust, but I’m also confident that we can. It goes back to what we do: if we serve customers and clients, day in and day out, in a way that people perceive as socially useful, then we will rebuild that trust.

 Read more

John Gapper

With hindsight, moving its listing to Nasdaq OMX on the grounds that it would get better advertising at Times Square than downtown at the New York Stock Exchange wasn’t a clever calculation for Kraft.

The trading glitch which caused Kraft’s shares wrongly to soar 30 per cent as it completed its switch to Nasdaq OMX was blamed by the exchange on an algorithmic trading error that affected other trading places as well. Read more

It is bizarre to come back to London after seven years in New York to find the UK struggling to launch 4G high-speed mobile services and European companies lagging the US. “If we do nothing in Europe, all the innovation will fly away,” José María Álvarez-Pallete, chief operating officer of Spain’s Telefónica, told an FT conference this week.

Andrew Hill

The chief executive of Brazilian miner Vale tells the FT that he admires the “painful beauty” of Peter Weir’s 1989 film Dead Poets Society, which raises more questions than it answers. Is Murilo Ferreira captivated by its tale of how an inspirational teacher can imbue students with a love of poetry, or is it the carpe diem – “seize the day” – message that attracts him to the film? More important, what do other chief executives’ film choices tell us about them?

Time was you would never have dared ask a chief executive about his or her favourite film, but this line of questioning has become de rigueur – particularly, it seems, in the UK’s Sunday newspapers. Gradually, a picture of CEOs’ favourite pictures has emerged. Read more

John Gapper

In a sense, the complaint brought against JPMorgan Chase for bad behaviour in the mortgage market is history. It concerns Bear Stearns, the ill-fated investment bank acquired by JPMorgan in spring 2008 as the financial crisis broke out.

But the suit from Eric Schneiderman, the New York attorney-general, which is part of a broader regulatory initiative to crack down belatedly on mortgage securitisation abuses, is still a fascinating portrayal of how bad things got. Read more

How much sex are management consultants getting? I ask only because House of Lies, the US television series about Galweather & Stearn, supposedly the US’s number two firm, suggests they are getting a lot, and in combinations and locations that testify to the profession’s reach and ingenuity.

John Gapper

How many eager young bankers is too many?

The question is raised by an FT report that the number of MBA recruits to banking is falling, less as a result of the job being unpopular than the possibility it won’t last.

Tom Braithwaite notes that the former enthusiasm for investment banking has eased among MBA graduates:

“The Wharton school at the University of Pennsylvania, which bankers consider the “conveyor belt of Wall Street”, sent 16.6 per cent of its class to investment banks in 2011 compared with more than one in four in 2008. The pattern is similar at other large business schools.”

 Read more

Andrew Hill

Xstrata’s novel decision to allow its investors to uncouple their vote on whether to approve retention payments from their vote on whether to back a merger offer from Glencore is fascinating.

But it seems to me that Glencore and Xstrata are polling the wrong people. If it is true, as Xstrata chairman Sir John Bond and the non-executive directors say, that “without the ability to retain key Xstrata managers to run the combined group’s mining operations… the value proposition of the combined entity is at risk”, shareholders are still short of a piece of vital information. Read more