Accountancy's latest survey of the background of FTSE 100 chief executives shows that 24 of them are accountants - and that accountants are the largest single professional group within these captains of industry.
Although this is the same number as last year's survey (see note in box), retirements, board reshuffles and changes in the constituents of the FTSE 100 have led to changes in this group. Of the 24, 19 were in their positions last year.
It has been anything but an easy year for many chief executives in the FTSE 100. The past 12 months have seen a number of chief executives lose their job as a result of difficult trading conditions, boardroom revolts or shareholder unease. The insurer Royal Sun Alliance, for instance, saw a shake-up of senior management following the results of a report by management consultants McKinseys and before a vital rights issue. Three non-executive directors and the chief executive, Bob Mendelsohn, left the company soon afterwards. The summing up of Royal's chairman, Sir Patrick Gillam, in the company's annual report is a testament to the precarious life of a chief executive: 'Bob Mendelsohn … set a firm strategic direction and did much to drive change in both the business philosophy and in the culture of the group,' he wrote. 'However, because progress to extract the greatest benefit from that work was not fast enough, the board decided that the interests of the group would be best served by a change in top management.'
Other serving chief executives remain in their position only under some strain. Sir Peter Davis, chief executive of J Sainsbury, is currently fighting a long battle to see through his 'business transformation programme' in the face of disappointing sales in the early part of this year. Newspaper reports have suggested that large investors have Sir Peter's scalp in their sights if the company fails to perform in the long term. Two of the chief executive casualties this year - Graham Wallace of Cable & Wireless and Brendan O'Neill of ICI - are accountants (see box).
Those departing from the FTSE 100, though, have usually seen ample compensation for the loss of office. Bob Mendelsohn, for instance, received just over 1m from Royal & Sun Alliance as a payment in lieu of notice and a further 319,000 under contractual benefits. His total remuneration for the year, including compensation for loss of office, amounted to 2.4m.
Many other changes at the top were prompted by the retirement of a long-serving chief executive:
• Mike Hodgkinson, chief executive of BAA, retired in June 2003 and was replaced by Mike Clasper, the deputy chief executive since 2001 and a former director of Procter & Gamble.
• Robin Miller retired as chief executive of Emap in January 2003 and was replaced by Tom Moloney, the group chief operating officer of the UK company and a former chief executive of the US division.
• Marcus Beresford retired from GKN on 31 December 2002 and was replaced by Kevin Smith, managing director of the aerospace division.
• Sir Keith Whitson retired as CEO of HSBC Holdings after 42 years with the company and five as chief executive. Stephen Green, previously group treasurer and head of investment banking at the group, replaced him.
• Peter Ellwood retired from Lloyds TSB in June 2003 and was replaced with Eric Daniels.
• At Scottish & Southern Energy, chief executive Jim Forbes retired and the company's finance director, Ian Marchant, took over.
• Arun Sarin took over as chief executive of Vodafone at the retirement of Sir Christopher Gent.
The amount of newspaper columns dedicated to the fortunes or otherwise of the chief executives of the UK's largest companies in the past year indicates just how closely the personality and performance of these men (and one woman) is tied to their company. The intense interest in recent weeks over the planned successor for Tony Ball of BSkyB, winner of Sunday Telegraph chief executive of the year award, has shown that investors and analysts see the chief executive as a fundamental part of the future success or failure of a company.
This turbulent year at the top of the FTSE 100 companies has shown that successful chief executives need determination, charisma and very thick skins as well as outstanding management and strategic skills. Of the three chief executives singled out by the Sunday Telegraph for their outstanding performance this year - Ball, Sir Terry Leahy of Tesco and Crispin Davis of Reed Elsevier - none has an accountancy qualification. Accountants may be increasing their influence at the top of the FTSE 100 but it seems they still have some way to go to convince the business world that they can be the best.
THE BOARDROOM CASUALTIES
Two accountant chief executives have been among the victims of a year of boardroom bloodletting
GRAHAM WALLACE, CABLE & WIRELESS
Graham Wallace, the CIMA-qualified chief executive of Cable & Wireless, spent the greater part of 2002 under pressure from the press, analysts and shareholders as the company's share price plunged. The crisis in the company was largely blamed on its data highways, hosting and internet services division, C&W Global, seen as Wallace's brainchild. Its poor business performance, though, led to a fixed asset impairment of 787m and goodwill write-off of 2.7m during 2002.
At the end of 2002 a new chairman, Richard Lapthorne was brought in after C&W's fourth profits warning in two years and the Global division has since been eliminated. Wallace eventually left the company in January 2003 but his troubles were by no means over. His two-year rolling contract meant that he could be entitled to a severance package of well over 1m, a fact that enraged shareholders. Wallace voluntarily agreed to a significantly reduced cash severance of six months' salary, or 387,500. His replacement as chief executive is Francesco Caio, a McKinsey-trained management consultant who was previously CEO of Olivetti and a director of Motorola.
BRENDAN O'NEILL, ICI
Brendan O'Neill, a CIMA-qualified accountant, left ICI after the company issued a profits warning in March 2003 which wiped 39p off ICI's shares in a day. The chief executive of the group's troubled fragrance division, Quest, was another casualty of the warning, which surprised analysts and investors.
O'Neill's departure later prompted a very public shareholder revolt over his severance package. Under the terms of the agreement O'Neill was paid 410,000 on leaving the company and was entitled to a further 410,000 if he failed to find a new position within seven months. He was also entitled to 25% of his salary (around 150,000) as a bonus payment if the new management team hit specified performance targets. Shareholders at ICI's AGM criticised the severance package and the bonus payments paid to O'Neill and other board members during 2002. Almost 10% of the company's shareholders abstained from the vote and another 6% opposed the compensation payments. 'There are too many weak links on the board,' said one irate shareholder. 'We should have Anne Robinson getting rid of most of you.'
LAST YEAR'S SURVEY
You can read last year's survey starting on p17 of the December 2002 issue. It showed that 23 FTSE 100 chief executives were accountants. However, it subsequently emerged that Fred Goodwin of the Royal Bank of Scotland is a member of ICAS, so the total should have been 24.
|Company Chief executive Yrs in Yrs Age Chartd Profession post with accoun- if not co. tant? accountant 3i Group Brian Larcombe 11 29 50 No Abbey Nat'l Luqman Arnold 1 1 53 No Alliance & Richard Pym 1 11 53 ICAEW Leicester Alliance Stefano Pessina 2 6 62 No Engineer UniChem Allied Philip Bowman 4 5 50 ICAEW Domecq Amersham Sir William Castell 14 14 56 ICAEW Amvescap Charles Brady 10 31 68 No (chairman and chief executive) Anglo Tony Trahar 3 30 54 CA(SA) American Associated Peter Jackson 4 11 56 No British Foods AstraZeneca Sir Tom McKillop 4 4 60 No Pharmacist Aviva Richard Harvey 2 11 53 No Actuary BAA Mike Clasper <1 2 50 No Engineer BAE Systems Mike Turner 1 37 55 No Company secretary BG Group Frank Chapman 3 7 50 No Engineer BHP Billiton Charles Goodyear 1 6 45 AICPA BOC Group Tony Isaac 3 9 61 CIMA BP Lord Browne of 8 12 55 No Engineer Madingley BT Group Ben Verwaayen 1 2 51 No Barclays1 Matthew Barrett 4 4 59 No Boots Group2 Richard Baker <1 <1 41 No Bradford & Christopher Rodrigues 3 8 54 No Management Bingley consultant British Martin Broughton 5 32 56 ICAEW American (chairman) Tobacco British John Ritblat 32 34 68 No Surveyor Land Co (chairman and managing director) British Sky Tony Ball 4 11 47 No Broadcasting Group3 Bunzl Anthony Habgood 7 12 56 No Management (chairman) consultant Cable & Francesco Caio <1 <1 45 No Management Wireless consultant Cadbury Todd Stitzer 1 20 51 No Schweppes Carnival Micky Arison <1 <1 53 No (chairman and CEO) Centrica Sir Roy Gardner 6 9 58 ICAEW Compass Group Michael Bailey 4 10 55 No Daily Mail & Charles Sinclair 14 29 55 ICAEW General Trust Diageo Paul Walsh 3 21 48 CIMA Dixons Group John Clare 9 17 53 No Emap Tom Moloney <1 22 44 No Exel John Allan 9 9 55 No Foreign & Mark Loveday (non Colonial Invmnt exec chairman) 1 2 60 No Trust4 Friends Keith Satchell 6 17 52 No Actuary Provident GKN Kevin Smith <1 4 49 No Engineer GUS John Peace 3 33 54 No Gallaher Group Nigel Northridge 3 27 47 No Marketing GlaxoSmithKline Jean-Pierre Garnier 3 13 56 No Pharma- cologist Granada Charles Allen 11 12 46 CIMA (chairman) HBOS James Crosby 2 9 47 No Actuary HSBC Holdings Stephen Green <1 21 54 No Hanson Alan Murray 1 15 50 CIMA Hilton Group David Michels 3 4 56 No Hotelier Imperial Chemical John McAdam <1 6 55 No Chemist Industries Imperial Tobacco Gareth Davis 7 31 53 No Group Intercontinental Richard North <1 9 53 ICAEW Hotels Group Johnson Matthey Chris Clark 5 41 61 No Metallurgist Kingfisher Gerry Murphy 1 1 48 No Land Securities Ian Henderson 6 32 60 No Surveyor Group Legal & General David Prosser 12 15 59 No Actuary Group Liberty David Fischel 2 18 45 ICAEW International Lloyds TSB Group Eric Daniels <1 2 51 No Man Group Stanley Fink 3 16 46 ICAEW Marks & Spencer Roger Holmes 1 2 43 ICAEW Group Mitchells & Tim Clarke <1 <1 46 No Butlers mmO2 Peter Erskine 2 10 51 No Morrison (Wm) Sir Kenneth 47 51 72 No Supermarkets Morrison (chairman) National Grid Roger Urwin 2 8 57 No Engineer Transco Next Simon Wolfson 2 12 36 No Northern Rock Adam Applegarth 2 19 41 No Old Mutual Jim Sutcliffe 2 3 47 No Actuary Pearson Marjorie Scardino 6 10 56 No Lawyer Provident Robin Ashton 2 14 45 ICAEW Financial Prudential Jonathan Bloomer 3 7 49 ICAEW Reckitt Bart Becht 4 15 47 No Benckiser Reed Elsevier Crispin Davis 4 4 54 No Group plc Rentokil Initial James Wilde <1 10 49 No Reuters Group Tom Glocer 2 10 43 No Lawyer Rexam Rolf Borjesson 7 7 61 No Rio Tinto Leigh Clifford 3 33 56 No Engineer Rolls-Royce Grp Sir John Rose 7 19 53 No Royal & Sun Andy Haste <1 4 41 No Alliance Royal Bank of Fred Goodwin 3 5 45 ICAS Scotland SABMiller Graham Mackay 4 25 54 No Safeway Carlos Criado-Perez 4 4 51 No Sage Group Paul Walker 9 19 46 ICAEW Sainsbury (J) Sir Peter Davis 3 13 61 No Schroders Michael Dobson 2 2 51 No Scottish & Tony Froggatt <1 <1 55 No Newcastle Scottish & Ian Marchant 1 11 42 ICAS Southern Energy Scottish Power Ian Russell 2 9 51 ICAS Severn Trent Robert Walker 3 7 58 No Management consultant Shell Transport Sir Philip 2 34 58 No Physicist & Trading Co Watts (chairman) Shire Pharma- Matthew Emmens <1 <1 51 No ceuticals Group Smith & Nephew Sir Christopher 6 15 57 No Engineer O'Donnell Smiths Group Keith Butler- 7 7 57 No Wheelhouse Standard Mervyn Davies 2 5 50 No Chartered Tesco Sir Terence Leahy 6 24 47 No Tomkins Jim Nicol 1 1 49 No Unilever Niall Fitzgerald 7 36 58 No Treasurer (chairman and chief executive) United Utilities John Roberts 4 4 57 ACCA Also an engineer Vodafone Group Arun Sarin <1 8 49 No WPP Group Sir Martin Sorrell 17 17 58 No Whitbread David Thomas 6 19 59 No Wolseley Charlie Banks 2 11 62 No Xstrata Mick Davis 2 2 45 CA(SA) Yell Group John Condron 3 11 53 No NOTES TO TABLE 1. Becomes chairman in December 2004 when Sir Peter Middleton retires. Current FD, John Varley, will become CE in December 2004. 2. Replaced Steve Russell Sept 2003. 3. Due to step down in May 2004. 4. Company has no executive directors Survey research and reporting by Liz Fisher NOTES ON COMPILATION We have used the most recent annual reports available, company websites and the PricewaterhouseCoopers Corporate Register|