Yahoo Finance Business focus: Who will be next to fall off City’s boardroom merry-go-round?
As AGM season nears its close, the City’s chairmen and chief executives will sit down for a reflective drink — a “large scotch” for Barclays’ John McFarlane and Jes Staley if the latter’s email gaffe is anything to go by.
Another spin of the merry-go-round will see a string of bosses fired, resign and switch jobs in the next year.
A spokesman for bookie Paddy Power, which has drawn up odds on the likely corporate casualties, says: “After being refused his bonus, amid huge restructuring, Gavin Patterson is the favourite.
“But there are serious contenders for this dubious crown. Maybe things have gone a bit stale-y for Jes Staley at Barclays while Pearson’s John Fallon might have to, erm, Fallon his sword.”
Gavin Patterson, BT (evens)
Patterson has had a rough year, even he would agree. A brutal fraud at the Italian arm emerged — he was in Davos at the time — and there have been ongoing service issues at Openreach, where BT admits it must do better.
Poor old Gav had to give up his bonus this year in recognition of the problems. And so far, deputy heads have rolled. He’s not at risk himself though, surely?
Well don’t be so sure, says Paddy Power. Smooth-talking Patterson is well-liked — everyone’s favourite chief executive Poldark lookalike. But if your shares fall 20% in one go, which they did, investors stay angry. They don’t forget. Another bad stumble and he could be making plans to dial out. By mutual agreement, of course.
Jes Staley, Barclays (11/4)
Staley looks like the best chief executive Barclays has had in yonks. He does seem rather accident prone though. He clumsily intervened in a whistle-blowing affair, leaving the distinct impression he planned to victimise the ’blower (this is seriously bad form). Then he gets embroiled in a row about business his brother-in-law did in Brazil. He was just speaking up for a family member, say his spinners, but further delving may not prove helpful to Staley.
Those two issues felt awkward. When he got taken in by an email prankster (who also snared Mark Carney) which sort of looked like it came from his chairman, alarm bells rang again. He should have spotted it. And he should not have replied in such an embarrassing manner, telling McFarlane he is a “unique man” who has “courage not seen in many people”.
The fawning tone made those in the City previously inclined to see Staley as a tough operator take pause. Staley is two-and-a-half strikes down. He needs a home run, or at least to get off the home plate, to calm the nerves.
John Fallon, Pearson (11/4)
If you needed evidence that Pearson boss John Fallon is under pressure, look no further than the education company’s annual meeting.
Teachers’ protests, a pay revolt, and calls for his head made for a lively meeting earlier this month. Teachers’ unions argue that Pearson, which bailed on newspapers to focus on education, needs an overhaul of its “high-stakes” testing in the US and privatisation of schools in Africa.
But it’s the rebellion in the Square Mile that is causing Fallon the most problems, with investors still reeling from January’s huge profit warning. Despite spending much of last year insisting Pearson was immune to the troubled US textbook market, Fallon finally succumbed and dropped its ambitious forecasts.
Many blame Fallon for not acknowledging issues in the US. Some analysts say the recovery is a long way off and Pearson is still not giving a fair reflection of how tough the market is.
Even its biggest rival in US college textbooks, Cengage Learning, said that it “didn’t know what math Pearson were doing” in its assessment of the US market. If another profit warning strikes, Fallon might be packing his bags.
Paul Polman, Unilever (10/1)
Unilever boss Paul Polman batted away Kraft Heinz’s £115 billion takeover approach with apparent ease but the Dutchman has plenty of work to do to convince shareholders their money is being put to good use.
Polman admits he could easily boost the shares by cutting jobs but refuses to do so — an admirable move but one that will test the patience of shareholders, many of whom said in a Bernstein survey that Unilever should have held talks with the American firm.Polman indicated at the weekend that he would hand over the reins “definitely in the next year or two”, so investors will probably give him time to show his plan is working.
The true gauge of shareholder satisfaction — the share price — is already 10% higher than immediately after the Kraft Heinz tilt. So it looks as though Polman has bought himself enough time to leave on his own terms.
Rakesh Kapoor, Reckitt Benckiser (12/1)
Rakesh Kapoor kept a pretty low profile until the chief executive of Reckitt Benckiser was thrust into the spotlight a year ago.
First, a scandal in Korea, where its toxic humidifier sanitiser caused the deaths of 93 people, forced a public apology from Kapoor. Now, the logic of the Dettol and Durex condoms maker’s £13 billion takeover of struggling baby-milk manufacturer Mead Johnson has come under scrutiny.
Some analysts suggest the company was spending big to paper over the cracks of its own business, especially in South Korea, India and Russia where growth is proving hard to come by. And more questions were raised when the Evening Standard revealed that Kapoor was in line for shares worth £15.4 million if the deal goes through and boosts profits as expected.
If the Mead Johnson takeover falls through and the company has to come up with a plan B to drum up growth, investors might decide a change of direction is needed.
Xavier Rolet, London Stock Exchange (20/1)
The winemaking Frenchman was on the verge of walking out of the London Stock Exchange until the EU threw a spanner in the works. The landmark £24 billion merger with Deutsche Börse should have been Rolet’s swansong; instead it threatens to become the noose around his neck.
After the deal collapsed, the 57-year-old promised to “postpone” his retirement — but lingering questions about his next move cloud his future at the group.
He placated some restless shareholders with the promise of a chunky special dividend to make up for the German calamity, and LSE’s performance is also on track, with first-quarter revenues up a fifth.
But with his industry increasingly a place of scale — the Deutsche-LSE tie-up was driven by the need to compete with bigger US rivals — Rolet needs to make a bold move or face enforced retirement.
