The Sunday Telegraph: Cut-price chairmen are best avoided

(Filed: 16/05/2004)

The price of FTSE100 chairmen is going up. Until recently, the going rate seemed to be about £250,000. The latest crop – for example, Dick Olver at BAE Systems and Niall FitzGerald at Reuters – is getting £500,000.

Chairmen are also increasingly getting big share grants. Think of Richard Lapthorne at Cable & Wireless or, more recently, David Arculus at mmO2. Some people will scream rip-off. But they shouldn’t. This is the healthy working of the market.

Several top UK companies are currently looking for, or about to look for, new chairmen. The most prominent – Shell, Glaxo, Marks & Spencer and Sainsbury – all have problems.

Shareholders need top talent. The days of boards being chaired by old buffers are, rightly, over. Chairing today’s companies, particularly the problem ones, is a challenge. The chairman has to put his reputation on the line. The more problematic the company, the more important it is that the chairman is incentivised with a big slug of equity.

In some cases, like M&S, the incoming chairman may have to sack his chief executive and hold the fort until a new one is in place. In others, like Glaxo and Shell, the new chairmen will have to rebuild relations with the City.

The job at Sainsbury will be particularly tricky, because its next chairman will have to deal with a founding family, which looks like it is shifting from absentee landlord to backseat driver.

But while the demand for chairmen – and the demands on chairmen – are going up, the supply of good candidates seems to be shrinking.

One reason is the lure of private equity. Why put your reputation on the line in a public company when you can probably earn more out of the limelight in private equity? Another reason is the government-inspired Higgs review. Nowadays, nobody is supposed to chair more than one FTSE100 company.

So the laws of supply and demand are pushing up the price of chairmen. So it would be counter-productive for shareholders to begrudge them their increased salaries. Pay peanuts and they will get monkeys.

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Critic’s corner

30 November 2023: Posted by John Donovan

The content below is sourced from current verifiable customer reviews of Shell Energy published on Trustpilot.
Extremely slow broadband for 10 months, not fixed. I have had slow broadband well below the guaranteed speed for 10 months and Shell Energy have not been able to fix it. They have tried sending about 4 or 5 engineers but have not fixed the problem. Gurps, who I have been dealing with most recently, has been friendly and polite, alth… Read more

Extremely Slow Shell Broadband

OVER 500 EXTERNAL PUBLICATIONS CITING OUR SHELL WEBSITES

See our link list of over 500 articles by the FT, Wall Street Journal, Reuters, Bloomberg, Forbes, Dow Jones Newswires, New York Times, CNBC etc, plus UK House of Commons Select Committee Hansard records, information on U.S. Securities & Exchange Commission website etc. all containing references to our Shell focussed websites, or our website founders Alfred and John Donovan. Includes TV documentary features in English and German, newspaper and magazine articles, radio interviews, newsletters etc. Plus academic papers, Stratfor intelligence reports and UK, U.S. and Australian state/parliamentary publications, also citing our Shell websites. Click on this link to see the entire list, all in date order with a link to an index of over 100 books also containing references to our non-profit websites and/or our activities.

John Donovan, the website owner

DISCLAIMER

This is not a Shell website. That fact should be abundantly plain from the overall content of this home page and our sister Shell focussed websites, including shellnazihistory.com. Click on the Disclaimer link at top of this page for more information. You Can Be Sure Shell does not endorse or approve of this website. There are no subscription charges nor do we solicit or accept donations. No advertising is accepted. It is an entirely free to use non-commercial website drawing attention to the negative side of Shell. The Shell logo image with the white text used on this website, as per the above example, is in the public domain because its copyright has expired and its author is anonymous. It can be found here on WIKIMEDIA COMMONS. Use this link for Shell’s own website.

The Sunday Telegraph: Cut-price chairmen are best avoided