FTSE chairman Gareth Davis tells us why he's in no rush to retire

 
Elizabeth Fournier
Serial chairman and former tobacco boss Gareth Davis tells Elizabeth Fournier how he juggles three FTSE-listed firms

THE ROLE of a company chairman is a tricky one. As head of the board, a good chair is expected to lead from the front; hiring, firing and managing its members, while keeping one eye on governance and another on the balance sheet.

It’d be enough to keep most people busy, but not Gareth Davis. After 38 years at Imperial Tobacco, Davis didn’t skip a beat when he retired as chief executive in 2010, taking on the William Hill chairmanship after just three months. By the start of 2012 he had added two more; FTSE 100 plumbing supplier Wolseley, and packaging firm DS Smith.

“Being a CEO is the best job in the world and don’t let anyone tell you any different,” Davis tells me during one of his regular visits to London to fulfil his responsibilities. “You’re completely absorbed in it and you meet such a wide variety of people; every day is different.”

With such an impressive business pedigree – Davis clocked up 14 years as chief executive at Imperial – you’d imagine he could be something of a looming presence over his current crop of CEOs. But Davis insists he’s happy these days to take a step back and let them breathe. “The relationship between a chairman and the CEO is very important, and it has to be a good one,” he says. “I like to be helpful – the CEO runs the business and it’s a fantastic job but it can also be very lonely. If the CEO is worth supporting then I’ll support them to the hilt.”

One man who’s never been short of Davis’ support is Ralph Topping, who has run William Hill since 2008 but will step down at the end of next year. The hunt for a replacement means the bookmaker is taking up most of Davis’ time at the moment, and though it’s a role he clearly relishes there’s no doubt Topping’s successor has big shoes to fill.

“Quite frankly they’re impossible to fill, so don’t even try. You’ll always be disappointed. You’re not going to get a 44-year industry veteran to replace him, so don’t even go there.”

Succession planning is something that Davis takes seriously. He helped Imperial pick his own replacement – Alison Cooper – and says the process is something he “really goes to town on”.

“It’s one of the few things a chairman absolutely has to get right, and one of the main areas where some chairmen do seem to come unstuck. It’s worth being very diligent, and even then there’s no guarantee you get it right.”

That’s certainly something William Hill – pre-Davis – learned back in 2007, when a year-long and ultimately fruitless external search for a new boss ended with Topping being promoted from within. It turned out to be an inspired appointment.

“The great shame of William Hill is that Ralph became CEO so late in his career,” Davis says. “He’s really kicked life into the business.”

Whoever ends up in the hot seat will have to jump through regulatory hoops to get there, with approval from gambling authorities from Nevada to Sydney needed to licence the right candidate. The incoming CEO will also face an uncertain regulatory landscape: the gambling bill is making its way through parliament, with repercussions for online and retail betting, while scrutiny of high-stakes betting machines has led to an industry-wide push to set time and cash limits for gamblers.

“As an ex-tobacco man I’ve had a career that’s been liberally laced with regulation,” says Davis wryly. “I have no problem with it as long as it’s well thought out and proportionate.”

“But it’s a sad fact of life that it can become a contest of the soundbite. When machines are labelled the ‘crack cocaine of gambling’ it’s very unhelpful. But of course that’s the nature of some politicians – they will distort situations via well-chosen soundbites.”

He’s similarly unimpressed with intervention from Westminster on board diversity, and is scathing of Vince Cable’s recent suggestion that recruiting firms should be presented with all-women shortlists.

“It’s complete nonsense, and an insult to women,” he says. “It’s starting to become less-than productive.”

That’s not to say he’s opposed to Lord Davies’ 2015 target to have 25 per cent of FTSE 100 board roles filled by women. William Hill has been there since late 2011, when it named Imelda Walsh and Georgina Harvey to the board, but Davis says he would “have no problem if it was 40 or 50 per cent – it’s completely based on ability”.

After a busy 2012-13, which saw the firm make two acquisitions in Australia (Sportingbet’s local operations and Tom Waterhouse) and buy partner Playtech out of a joint venture, Davis says 2014 is now “a year of integration” for William Hill. But that’s not to say the right opportunity wouldn’t catch his eye.

“The balance sheet is very healthy, and it’s a fragmented, international market,” he explains. “The very strong likelihood is that our next move would be outside of the UK again.”

At Wolseley, meanwhile, things have been looking up for a while, after a disastrous financial crisis that saw its share price fall from more than £138 in mid-2007 to less than £12 just 18 months later.

“Wolseley is a hell of a bellwether – particularly for US macroeconomic wellbeing – and certainly what we’re seeing is a strong recovery in the States, and a good recovery here in the UK now” he says. “I’ve seen this before and that’s the way of the world – States first, then the UK, then continental Europe.”

With Wednesday’s Budget dominating the news, Davis has his own wishlist for the chancellor – a vehemently pro-business agenda that he admits won’t sit well with everyone.

“The right way to go is to press the foot to the floor to embed the recovery, via more investment in business and jobs. These are unexciting things for the consumer but we need more capital and R&D allowances, and incentives for firms to take on more young people.”

But that shouldn’t mean, he says, a raid on more wealthy voters’ assets to pay for those jobs.

“I’m concerned about any political stance that says ‘we’re going to take off that lot to give to this lot’. That’s saying you’re not interested in the size of the pie, just how it’s distributed, which is an irrelevant debate unless the pie is growing. The prime agenda of all political parties should be growing the pie. And you grow the pie by increasing productivity in all sectors.”

With 42 years in industry and no sign of slowing down, productivity is clearly not something Davis himself has a problem with. “I’m just coming up to 64 and I haven’t seen any diminution in my enjoyment of business – I think I’ll just bang on as long as I’ve got my health and I’m still enthusiastic.”

CV GARETH DAVIS
Born: 1950 in Bolton

Education: Beal Grammar School for Boys in Ilford, Essex. Graduated with a degree in Geography and Economics from the University of Sheffield in 1972.

Career
1972: Joined WD & HO Wills, part of Imperial Tobacco, as a graduate trainee straight out of university.

1973: Became manager of the firm’s Newcastle-upon-Tyne factory

1988: Promoted to managing director of international operations

1996 After being named chief executive, Davis led the demerger of Imperial Tobacco from Hanson, and its listings on the London and New York Stock Exchanges

2003 Became a non-executive director of Wolseley, before stepping up as chairman in January 2011

May 2010 Retired from Imperial Tobacco after 14 years as chief executive

September 2010 Named chairman of William Hill

January 2012 Took on his third chairmanship at packaging firm DS Smith

Hobbies
A Bolton Wanderers fan who likes a bet on the football results