Du Plessis: Pot calling the Kettle black

Interesting to read this lament from someone who has to much to be grateful for this "narrow british way of life". Thanks to the "narrow" circle of people who seem to be in control of so much of the City he sailed comfortably from one post to the next.

When he extols the positive (in his "narrow" view) aspects of the business enviroment in the United States he conveniently forgets to mention that a separation of CEO and Chairman is highly unusual over there. And rightly so, as the facts clearly demonstrate that a separation has virtually no benefit and if anything is detrimental. If business performs markedly better in the USA it clearly speaks against this (expensive) separation.

Du Plessis clearly thinks that the sky is the limit for executive pay - again assuming that only high pay for the C-Suite will lead to strong economies when that is not supported by the facts. The USA may look well positioned as the nation with the highest per-capita income (apart from minnows like Luxembourg, Monaco etc) but can one assume that extravagant levels of executive pay are the principal - or necessary - cause of this?

One of the people rankings so popular with the press placed du Plessis as the 10th most powerful person in UK business (TheTimes 2006 Top 100) But does he enjoy any legitimacy? Who gives him this "power"? the same narrow circles that control government, regulators and major firms!

In the latter case it is the financial intermediaries - Pension Funds, Mutual Funds, Insurance companies and Private Banks - that vote "their" shares in favour of high pay. Like du Plessis they have no explicit mandate on how to cast their votes from the ultimate shareholders - the great unwashed public. Proxy Advisors may look like they take an objective view they are also beholden to these Intermediaries who pay substantial (secret) fees to them.

(10 May 2023)

Narrow British way of life’ is holding back the City (PayWall)

Does UBS Chairman really deserve $ 6 Mio?

Or is he just an extremely well-paid PR operator? If American firms can get by without a separate Chairman is keeping such expensive staffers a necessary expense? Any decent IR professional could front such an announcement. Does anyone in the Corporate Governance crowd really care?
(22-Jan-2019)
UBS sees outflows of $13 Million

Chairman - a cushy sinecure for the Establisment

Looking at Philip Hampton's numerous board memberships one can notice one thing: not one of the companies he passed through can be seen as a thorough success - look at the list and point out one if you can find it! British obsession with the role of Chairmen is somewhat similar with the obsession of pack the House of Lords with superfluous worthies!
(21-Jan-2019)
About Philip Hampton
GSK Chairman to retire

Chairmen - expensive decoration?

If the USA gets by without expensive chairmen, why keep them in clover here in the UK? Just a retirement bounty for the old boys? (6-Nov-2017)
Bloomberg

Overpaid UBS Chairman

American Companies do very well without the expensive decoration of Chairmen, why does UBS have to pay millions to Axel Weber, just to utter comments such as these? They have nothing to do with the bank's business! (8-May-2017)
UBS CHAIRMAN: 'Brexit is a time bomb' and Macron's win 'doesn't mean Europe is out of the woods'

Mark Tucker: From AIA, Goldman Sachs, and now HSBC

Given that regulators tried to improve the quality of senior managers in banking it is surprising that Tucker's appointment seems to be waved through by officials in London and Hong Kong. He never had a senior position in frontline banking. Being chief beancounter at HBOS in the period leading up to the Crash of 2007-09 is not exactly a badge of honor. What moral authority do regulators no have left? (13-March-2017)
Who is Mark Tucker: From AIA, Goldman Sachs, and now HSBC - Business Insider

HSBC names AIA boss Tucker as chairman

Most American companies do very well without a separate chairman, so why the extra expense? And how can one man really do both jobs properly? Jobs for the boys! (13-March-2017)
HSBC breaks with tradition, names AIA boss Tucker as chairman

Chairman - only Jobs for the (mostly) old Boys?

American Banks are standing tall, and most of them do not have an 'independent' Chairman to micro or macro manage their CEO's. So what IS the point of employing expensive Chairmen? Most of them are past their best years and this reverse ageism surely does not lead to the desired performance as the examples of quite a few (all?) of the European Banks attest. Maybe HSBC could save a penny or two by not wasting money on headhunters.
( 18 March 2016)

Goldman board changes - are sidedeals acceptable?

Pressure by individual shareholders to effect changes in corporate governance may appear to be a good thing but it creates its own problem. The case of Goldman Sachs is a topical example. Agreeing to changes in board structure just to save the post of chairman for the CEO is not an arrangement that should point the way forward to improved corporate governance. Individual shareholders should communicate their wishes first of all to fellow shareholders and not try to get special deals from management - behind closed doors or openly. Changes to board structure should not be tailored to individual companies but should follow a general principle that is applied to all public companies. There is no point in fighting the governance war over and over again, without any reference to clear principles. This just leads to endless (and mostly futile) discussion and allows company managements to evade demands for decisive changes.
(28/03/2012)

Dual CEO'S - if anything a formula to be promoted

The recent troubles at Blackberry manufacturer Research in Motion seem to suggest that dual leadership can be damaging for an organisation (FT). But Rome had two consuls during its rise to dominance, and they were limited in their power to a tenure of one year. Goldman Sachs in the late 1970s and early 1980s had co-chiefs - and that was when the firm laid the foundation to its rise to dominance. The challenge for boards and shareholders is to make sure there is a deep bench of talent - a thing that is sorely missing in many companies, why else would a company ever look for an external candidate for any of its top positions?
(31/01/2012)

Executive Pay - consultative vote not enough

There is disappointment among corporate governance activists in Switzerland who hoped that (purely 'consultative') shareholder votes about (top) executive pay would lead managements to moderate their greed. Novartis Chairman and CEO shows no shame when accepting a 'compensation' package calculated to be worth Sfr 25.3 million in 2010. Apart from the fact that combining the two top offices is already a dubious corporate practice the fact that he gets 'compensated' for accepting a no-compete clause is another slap in the face for shareholders - but also for other employees who generally do not get separate compensation if they have to submit to a no-compete clause in their employment. One should think that someone who certainly has a high degree of intelligence like Vasella would be perfectly able to make a decision whether or not to accept such a clause when accepting his basic pay package. That he gets substantial pay for 'retirement benefits' that are not necessarily aligned with the pension benefits of ordinary  employees is another contravention to fair play. Summing up we can say that these 'consultative' votes are a waste of time. We call for binding votes on top executive compensation and demand that all perks (health, pension, share options etc) are made available to all employees on a pro-rata basis related to basic salary. Even better, if top management is prevented from receiving discretionary bonus awards the whole discussion about annual votes on compensation would become superfluous.
(23/02/2011) 

Chairman - just another dead weight cost?

News that Legal & General, one of Britain's leading life insurance and pension providers, has finally managed to identify its preferred candidate to become chairman leads us to ask why the role of Company Chairman is seen to be a cornerstone of good corporate governance in the UK. While the US system of the all-powerful CEO may well have its defects, the UK system in turn has not lead to much better performance by the listed company sector. Both systems need a major overhaul but one thing is certain: separate chairman do cost money and may create friction as the CEO is constantly second-guessed.

CEO moving on to role of Chairman

We fully agree that allowing the outgoing CEO to move on to the role of Chairman poses serious problems for good corporate governance. But as we do not really think that the separation of the two roles is essential for the running of a company we consider this discussion to be a sideshow. The United States have a perfectly efficient economy and most companies combine the role of CEO and Chairman (and President) in one person. The problem with excessive remuneration of CEO's (and other senior corporate executives) cannot simply be explained with the fact that the two positions are held by one and the same person.