There are few more obvious boardroom caricatures than that of the trigger-happy chairman, so it hasn’t been difficult to cast Donald Brydon in the role of executive assassin.
Next week, the effort to oust him from the London Stock Exchange Group (LSEG) will reach its damp squib of a denouement. To Sir Christopher Hohn, boss of The Children’s Investment Fund Management (TCI), Brydon’s historical willingness to fire chief executives disqualified him from overseeing the search for Xavier Rolet’s successor.
Sir Chris’s logic possesses a flawed understanding, though, of the role of a public company chairman, whose most important job is to determine its executive leadership – and to dismiss bosses when it’s in the interest of the company.
Most of the proxy votes ahead of the EGM have now been cast, and it’s clear that Brydon will win at a canter. To the names of Aviva, BlackRock and the Qatar Investment Authority, I’m told Lindsell Train can be added in his support.
Even so, I’m mildly surprised that the LSE Group’s board didn’t make more effort to focus on an intriguing element of Brydon’s defence which has been passed to me.
Research produced by Royal Bank of Canada, LSEG’s joint corporate broker, discloses the performance relative to the FTSE 100 of a quartet of public companies chaired by the Scot.
At Allied Domecq, Scottish Power, Smiths Group and Sage, RBC’s analysis suggests that total shareholder return after a new chief executive was appointed outperformed the index by a greater margin than the period before their predecessors were moved on by Brydon.
TCI privately acknowledges that there is now no chance of it securing a majority vote in favour of Brydon’s ousting. It continues to believe, though, that a substantial vote against him would leave him in a discomfited position.
To a point, perhaps. If more than 25 per cent of shareholders were to vote against him, it might encourage TCI to have another go at next spring’s annual meeting. Even that level of protest now looks unlikely.
If nothing else, the events of recent weeks raise interesting questions about the guerrilla tactics employed by activists, while their target public companies are forced to adhere to prospectus-level standards when making public statements.
As the scale of activism in the London market grows, that will be an important question for regulators to consider. And while there are no real winners from the LSE Group fracas, it’s clear that Brydon – a bruiser, bruised – will live to fight another 450 (or so) days as the LSE Group’s chairman.
Another corporate Saga
Consignia, Accenture, Acromas: the penchant for ridiculous corporate names has always been a vice of grandiose boardroom figures. The last on that brief list has thankfully disappeared.
Saddled with huge leverage after years of private equity ownership, the AA and Saga were never relevant bedfellows. The breakdown recovery service continues to struggle with an indebted balance sheet, although efforts to prise away its insurance arm have so far failed to yield a rational deal for shareholders.
Could there also be a sensible break-up option at its former sister company? Saga’s shares have sunk by about a third over the past year, with most of that decline coming in the wake of a profit warning last month.
Bankers are beginning to talk up the potential for splitting its travel and insurance operations, with both units already catching the eye of corporate buyers. Big obstacles remain, notably unwinding Saga’s own corporate structure. But after the recent loss of value, determining whether such a break-up makes sense will be the first job of Andrew Goodsell’s successor as Saga chairman.
It was inevitable that Patric Johnson wouldn’t be out of work for long after leaving Panmure Gordon in the wake of its takeover earlier this year.
Johnson, who did an excellent job on tightly constrained resources, is joining N+1 Singer as deputy executive next month, and will step up to replace Tim Cockroft within 12 months.
The appointment was announced internally earlier this week, but one question springs to mind: why hasn’t N+1 Singer made more hay about such an obvious coup?