Welcome to your weekly corporate governance briefing. This week there’s a host of topics up for discussion – from the chief executive who chooses not to chair meetings to succession at the Berlusconi family empire. Before we get stuck in, don’t forget to get in touch about our AOB section. Overheard any nuggets of wisdom or wit in the boardroom that you might like to share? Email me your offering and I will consider it for inclusion (anonymised where appropriate, of course). As always, the latest stories and resources are on ft.com/board-network-members. If you have any membership queries, email [email protected]. Feel free to forward this newsletter to other directors. They can join FT Board Network via ft.com/board-network. Thanks for reading. Recognising others’ strengths
Liv Garfield, chief executive of Severn Trent, speaking at the Women in Business Summit. Liv Garfield, chief executive of UK water utility Severn Trent, never chairs meetings, simply because she recognises that it is not her strength: “I’m a better contributor, a motivator… a piecer-together, a convenor,” she told me at last week’s FT Live Women in Business Summit in London. Instead, Garfield asks colleagues to rotate into the role of chair for executive gatherings and takes her place round the table where she can best exercise the qualities she highlighted, such as a relentlessly positive attitude, boundless energy, and a never-look-back approach. When it comes to the board, US companies continue to favour handing the roles of chair and chief executive to the same person. Though a majority of S&P 500 companies currently split chair and chief executive positions, Spencer Stuart’s 2022 Board Index calculated that only 36 per cent had a truly independent chair. In the UK, by contrast, the governance code allows for a single individual to hold both titles only if shareholders are consulted and the reasons are explained in full. Fans of the US system would point out that concentration of power at the top doesn’t seem to have harmed the American corporate economy. But I favour some control over leaders’ natural desire to hold as many levers as possible. Garfield is of course constrained by UK governance. In the boardroom, Severn Trent has an independent chair. Still, Garfield’s reticence to chair senior leadership meetings is exceptional. Her approach ought to reduce the risk of “hippo” decision-making, where the highest paid person’s opinion always wins out. “If you’re naturally optimistic like me, you have got to be careful not to be a railroader,” she told me (though I can’t help thinking that just having the boss in the room is bound to affect the discussion). Her approach also makes it more likely that the meeting chair will favour those with the skills needed to tackle the problem at hand. After all, research suggests that organisations perform better when leaders recognise what others bring to the table. Chart of the weekAt the start of the year, some investors and analysts expected an economic recession to hit the US, dragging down stocks. That has not materialised yet – the economy is growing and the S&P 500 index has notched up more than 14 per cent this year. But all is not what it seems: strip out a hub of just seven tech companies, and the index is flat. And some are warning that this imbalance is unsustainable or a sign of tough times ahead.
| Marina Berlusconi: the discreet Italian heiress running her family empire | Succession: Silvio Berlusconi’s eldest daughter chairs Fininvest, the €4bn company he built. Now the ‘family matriarch’ has her work cut out to secure both the business and his party Forza Italia | | | Cineworld bosses secure near $35mn exit payout | Remuneration: In an unusual move to sweeten the bankruptcy deal, lenders have agreed to pay some of the management team between $30mn and $35mn in cash in the year following their exit | | | How Hong Kong’s multinationals and global funds are preparing for the worst | Risk: Concerns about US-China hostility will lead many corporates into worst-case scenario planning – and Hong Kong is likely to indicate how they are ‘recalibrating’ | | | Pixar flop shows Walt Disney struggling to revive the magic | Strategy: Recent box office disappointments have led some experts to say Disney is in a creative rut – and to question whether chief Bob Iger has time to turn it around | | | | Best from elsewhereGlobal chief information security officer (CISO) survey | Heidrick & Struggles Over half of survey respondents said they thought their board “only somewhat has or does not at all have the knowledge or expertise to respond effectively to their presentations”. That could change, however, as 30 per cent of respondents said they currently sit on a corporate board – up from 14 per cent the previous year. HR operating model report 2023 | The Talent Strategy Group In this report – which looks at how companies structure their people function – researchers note that the question about whether HR has a seat at the table is “settled” as 86 per cent of CHROs report into chief executives. Whether they make good use of that position is “open”, however. Global workforce hopes and fears survey 2023 | PwC Think the “great resignation” is over? Think again. Some 26 per cent of respondents to this survey said they intend to quit their job in the next 12 months – an increase from 19 per cent last year. And employees aren’t afraid of AI either, with respondents being more positive than negative about it.
From FT Specialist’s AgendaBeginner’s luck? Chief executives don’t always deliver second time around Recent research found that first-time leaders produced higher market-adjusted total shareholder returns and, on average, led “three years longer and with less volatility in performance”. Any other businessHayes – who leads Raytheon, one of the US’s largest aerospace and defence companies – encapsulates the difficulties facing many western manufacturers amid growing tensions between Beijing and Washington. Have words of wisdom to share? Email me. |