Sometimes a species reaches the end of its natural existence. As its numbers dwindle, disappearance becomes inevitable and the last survivors of the doomed herd become objects of curiosity and pity. This is happening to chief executives who are also chairmen — but with none of the pity.
This has not been a salutary week for European corporate governance. At Volkswagen in Germany and at Industrivärden in Sweden, a system intended to encourage stability and long-term growth has instead created self-indulgence.
No matter how good Total’s preparations, the death of its chief executive Christophe de Margerie in a plane crash late on Monday will have plunged the senior ranks of the French oil group into an emotional, logistical and governance nightmare.
When boards discuss succession planning, they often talk about it in jocular-morbid terms, typically debating “what happens if the CEO is run over by a bus?”. But when such sudden deaths occur, it often exposes just how poorly they have prepared for this type of emergency.
The US-based Conference Board, in a useful note for directors issued last year, pointed out that while three-quarters of S&P 500 companies surveyed in 2011 had succession plans in place, only 83 per cent of those had put in place an emergency succession component. Given that between 7 and 15 US public companies are hit by the sudden death of their chief executive in any given year, the group suggested the fact that a third of large companies had not considered emergency succession was simply not good enough. Read more
Leonardo Del Vecchio: out with the new, in with the old? (Photo: Paolo Bona)
I’m annoyed with Leonardo Del Vecchio, founder of Luxottica, the sunglasses and spectacles-maker. By retaking the executive reins at 79, he has undermined a recent column in which I contrasted his enlightened approach with the benighted version of family ownership and management practised by Rupert Murdoch. Worse, his decision looks like a step back for the company itself.
Mr Del Vecchio apparently has no intention of installing any of his offspring as chief executive, now the well-respected Andrea Guerra has stepped down. That is good. But when you give yourself the title of executive chairman and you own two thirds of the company, it is hard to say that you have kept the operational and shareholder aspects of your business separate, which I still consider to be the best model. As I wrote in March, “maintaining both ownership and management of a large family business more often than not leads downhill into further confusion, uncertainty and internecine conflict”. Read more
Pale, male and stale: what's next for the boardroom?
As boards gradually move towards better balance by gender, what is the next frontier?
Alan Mak, a 30-year-old non-executive director of Havas Worldwide (UK), thinks boards should make it a priority to take on more young directors. He and I have gone head-to-head on the issue in print and we took the debate onto Twitter on Thursday to test the mood. Read more
Leo Strine – comforter of the corporate executive? (AP Photo/Richard Drew)
Has shareholder democracy in the US gone too far? The very idea seems risible to Europe-based corporate governance advocates, myself included, who have watched American investor rights advance in a good direction, but at a snail’s pace. But those making the case now for limiting investor powers have a strong, prominent, and eloquent ally in Leo Strine, Delaware’s chief justice. His latest Columbia Law Review article, ostensibly arguing for a pragmatic version of investor democracy, is a must-read. Read more
Unless Euan Sutherland’s resignation letter is published in full, the context of his claim that the Co-operative Group, where he is chief executive, is “ungovernable” will remain unclear. But it is a strange declaration for any professional manager to make: cats are ungovernable; humans, however cussed and contrary, generally do respond to direction. How they are directed is another matter.
The Co-op is a strange beast, as the saga over Co-op Bank chairman Paul Flowers’ appointment and eventual disgrace revealed. But I think Mr Sutherland has been doing a decent job of taming it. He took some flak last month for appearing to ask Co-op members – and the general public – how the group should be run, rather than setting his own strategy. I read this, however, as a clever combination of an advertising campaign, an opinion poll, and a response to those insiders who disliked his management style. Read more
Paul Flowers: tests put the board off the scent
The idea that Paul Flowers – the disgraced former chairman of the UK’s Co-operative Bank – might have got the job largely because he aced a set of psychometric tests is, on the face of it, astonishing. As we now know, the Methodist minister had little previous banking experience and is being investigated for allegedly buying illegal drugs.
But unfortunately it is increasingly easy for executives to allow the apparent certainty of test data to overrule more subtle and more serious concerns visible to mere human beings. Read more
You come back from holiday to find your chief executive has given up power to a central constitution. Your team has been disbanded and your title scrapped. You are now all partners, each with an agreed role and a duty to support others whose work overlaps yours. Instead of allowing tension to fester internally, you will raise problems openly at regular meetings that promote positive action.