SIR RICHARD Broadbent’s position as chairman of Tesco looked increasingly vulnerable yesterday after the latest revelations over mis-stated profits raised questions over governance at the chain.
Several City analysts suggested that Broadbent would have to go, including Shore Capital’s Clive Black, who described his position as “untenable,” after overseeing his third profit warning in weeks.
“This development may raise, indeed must raise, much more fundamental questions over the chairman’s position and the nature, composition and extent of the board, which to our minds has been lop-sided between executives and non executive directors for far too long,” Black added.
But the supermarket’s chairman of three years said he had no intention of stepping down, telling journalists yesterday: “Shareholders will have to decide whether I am part of the problem or part of the solution. My intention is to continue to be part of the solution.
“When a big company like this goes through tough times, everyone has got to form an opinion about whether the board and the chairman who leads that board are addressing the issues or ducking the issues. I don’t think we are ducking the issues,” he added.
Broadbent also denied that the profit error was a failure of financial oversight, describing it as “out of the ordinary” and an issue that even the auditors failed to spot.
“Things are always unnoticed until they have been noticed,” he said, echoing US politician Donald Rumsfeld’s infamous known unknowns speech.
Retail analyst Nick Bubb came to Broadbent’s defence yesterday, saying it was wrong to blame non-executives for the mistakes of executives.
However, Bernstein Research’s Bruno Monteyne said: “There has clearly not been sufficient oversight and the accounts have become overly stretched. This has all happened under the watch of Sir Richard Broadbent, we suspect he may be under pressure as a result.”