The Times: Corporate hotshots may go down as well as up: The power 100: “A few short months ago, the chairmanship of Shell, the world-famous oil company, was one of the most desirable jobs going. The title bought status and influence, not to mention a bulging pay packet. That was before a large part of Shell’s oil and gas reserves mysteriously evaporated.” (ShellNews.net)

By Jon Ashworth

1 Nov 04

Britain’s best-connected business leaders take the podium tomorrow in the 2004 version of The Times Power 100. Here our correspondent looks at the losers

EVENTS unfold quickly in the world of business. A few short months ago, the chairmanship of Shell, the world-famous oil company, was one of the most desirable jobs going. The title bought status and influence, not to mention a bulging pay packet.

That was before a large part of Shell’s oil and gas reserves mysteriously evaporated. Now, bright young graduates might think twice before sending in their CVs, while Shell’s present management is struggling to win back the confidence of investors.

Sir Philip Watts, who was ousted as chairman of Shell in March, is among noticeable absentees from the 2004 edition of The Times Power 100, published tomorrow, which traces the connections between Britain’s leading boardroom figures.The analysis has been extended this year to embrace FTSE 350 companies.

Sir Philip ranked 59th in last year’s inaugural league. He holds no other Footsie directorships and will vanish from the league.

Among other dramatic changes, Luc Vandevelde, ninth last year, resigned in May as chairman of Marks & Spencer, although he remains a non-executive director of Vodafone. Vittorio Radice, previously in charge of homeware at M&S, has been erased from the league. Radice was responsible for M&S’s Lifestore outlet in Gateshead, which was among the first casualties of the new regime under Stuart Rose, the M&S chief executive.

In the game of boardroom Snakes & Ladders, Rose joins the Power 100 league, while Radice and Vandevelde take the slippery slope to oblivion.

Boardroom reshuffles will bring big changes in this year’s rankings. Last year the man deemed Britain’s most powerful boardroom executive was Sir Robert Wilson, then full-time chairman of Rio Tinto, the mining company. Sir Robert was also a non-executive director of Diageo, the consumer goods group, and BG, the gas group, boosting him to the top of the rankings ahead of heavyweight industrialists such as Sir Mark Moody- Stuart, the former Shell chairman, and Rob Margetts, non-executive chairman of Legal & General and BOC Group.

Sir Robert fares very differently this year. He has reshuffled his portfolio and is now non-executive chairman of BG and a non-executive director of GlaxoSmithKline.

The GSK appointment was an example of the boardroom network in action. Sir Christopher Hogg, GSK’s chairman, recruited Sir Robert to help to build bridges with investors after the high-profile row over a proposed severance package for J. P. Garnier, the GSK chief executive.

Acknowledging the “club” in an interview earlier this year, Sir Christopher said: “It’s helpful that I should know somebody like Bob Wilson from 15 or 20 years back and be able to go to him in a time of crisis.”

Sir Christopher steps down as GSK chairman at the end of December. In a round of baton-passing, he ceded the chairmanship of Reuters, the media group, to Niall FitzGerald, who moved across from Unilever. Sir Christopher Gent, the former Vodafone chairman, takes the helm at GSK in January.

Sir Richard Giordano retired as BG’s chairman at the beginning of the year. He remains senior non-executive director and deputy chairman of Rio Tinto. He was 24th in the Power 100 league last year.

The highest-ranked woman last year was Baroness Hogg, chairman of 3i, the venture capital group. Other women in the league included DeAnne Julius, former chief economist at British Airways, and Alison Carnwath, the former Schroders corporate financier.

Although boards are widening the pool from which they recruit non-executive directors, change is slow in coming. Recent research by Deloitte, the accountant, found no increase in female board directors at FTSE 350 companies in the past 12 months.

Just 3 per cent of executive directors and 8 per cent of non-execs are women. However, the number of female board members is expected to rise in coming years. Non-executive directors are increasingly being recruited from advisory firms and from overseas.

Since April, The Times has published a weekly series of interviews with Power 100 candidates. Of those approached, only about half agreed to be interviewed. The rest were reluctant to share their insights on leadership in the boardroom.

Those to decline include Sir Crispin Davis, chief executive of Reed Elsevier, who is known for not talking about anything other than strict company business. Bart Becht, chief executive of Reckitt Benckiser, is another who refuses to give interviews. Others to say “no” included Lord Stevenson of Coddenham, the chairman of Pearson, Lord Burns, the chairman of Abbey National, and Michael Miles, the chairman of Johnson Matthey.

As one might expect, those who did participate were articulate and personable. Their story is typically one of a long, steady rise through the ranks coupled with an instinctive networking ability.

Sir Robert Wilson at Rio Tinto and Maarten van den Bergh at Shell each spent more than 20 years rising to the top of their organisations.

Directors interviewed took issue with the widely held perception that boardroom appointments are made on a nod and a wink. They insist that the “club” is long gone, though admit that they all know each other in one capacity or another.

Sir Robert says: “It’s not who you know. It must be what you know and what you do, because it’s what you’re currently doing which determines to a large extent who you know. So ‘who you know’ comes at the end of it rather than the beginning. There used to be some old pockets in the City where it started with ‘who you know’. I think those are long gone.”

DeAnne Julius, who sits on three FTSE 100 boards, says there are advantages to knowing about potential boardroom colleagues. We never hear about the instances in which candidates are vetoed by their peers. Julius says: “You’ll try to keep them out because they haven’t delivered.”

A common complaint among directors is the relentless tide of red tape associated with corporate governance reforms and corporate scandals in America. Chairmen complain that valuable time at board meetings is given over to ensuring compliance with the rules. There is also a huge cost implication. FTSE 350 companies with a presence in America are having to hire dozens of accountants to ensure compliance with the Sarbanes-Oxley Act. Section 404 of the Act requires boards to report on the effectiveness of their internal controls over financial reporting.

A related concern is whether potential non-executive directors will be willing to put themselves forward for boardroom roles — at a time when calls for greater boardroom diversity have never been louder. Disasters such as Equitable Life are enough to make any budding non-exec pause for thought.Non-executives face huge potential legal liabilities for a fee of, perhaps, £30,000 a year.

Chairmen and chief executives spend a tremendous amount of time travelling. Some of them are away for six months in every year, once all the trips are added up.

When at home, they relax by walking and gardening. Their favourite gizmo is the BlackBerry e-mail device, which provides a distraction in airport lounges and taxis. They admit to being motivated by their huge salaries, while insisting that job satisfaction is more important.

Businessmen routinely cited as “most admired” include Bill Gates, at Microsoft; Sir Terry Leahy. at Tesco; and Sir Willie Purves, past chairman of HSBC.

Another businessman to win the universal respect of his peers is Lord Browne of Madingley, chief executive of BP. He holds no non-executive directorships but will feature again in this year’s Power 100 rankings thanks to BP’s massive stock market clout.

Lord Browne’s views on leadership have yet to be revealed. A request to interview him has been outstanding since May. But then, he is a very busy man.