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Bart Becht quits while he’s ahead

April 15, 2011

The Financial Times headline almost said it all: “Becht goes out with a bang as £2bn is wiped off Reckitt shares.” Bart Becht, chief executive of Reckitt Benckiser, has abruptly announced his departure from the household goods company he had steered to unprecedented success over the past 16 years. An instant £2bn personal valuation was his reward. A better launch-pad for a portfolio career would be hard to imagine, if that is what he has in mind.

But with the bouquet came a few brickbats as well. Could it be that arguably the most successful corporate businessman of his generation was also one of its most selfish? I’m not talking about the £90m “fat cat” cheque he received in 2009 for services rendered, but the manner in which he announced his departure.

Far from organising an orderly succession, Becht brutally declared he was going in September, leaving – by some accounts – the company rudderless. Or rather, in the hands of the no doubt competent, but almost unknown, Rakesh Kapoor. In so doing, he had arrogantly put his own interests ahead of those of shareholders, who had invested in the Becht marketing magic, mistakenly believing he would be there forever.

I’m afraid I don’t buy that argument in its entirety. All right, the announcement was a shock – Becht is only 54 and had given no previous indication of his desire to quit, from what we are told. But when you invest in personality, you also invest in that personality’s potency. The minute a successor is announced, the potency is diminished and the magic fades. Ask yourself why Elizabeth 1, a potent leader if ever there was one, never announced a successor until she was on her death-bed. Ask yourself why there is no successor in sight at WPP.

An interregnum, however defined, carries risks all of its own. Stakeholders (whether subjects or shareholders) worry about the competence of the successor, who can never be tried and tested enough. The barons/boardroom rivals become refractory and disloyal – why wasn’t one of them chosen? The former leader can’t quite bear the idea of stepping back and letting go: Sir Stuart Rose’s latterday conduct at Marks & Spencer springs to mind.

No, quit while you’re ahead. There’s a lot to be said for a clean, swift break. Shareholders will get over the shock in a surprisingly short time.

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Wheatly plays Jazz City riff, with Aberdeen sponsorship

October 12, 2010

Once an adman, always an adman. Richard Wheatly has moved on a bit since his days as chairman of Leo Burnett – to become, by the look of it, Britain’s foremost jazz entrepreneur. But he’s still a dab-hand at targeting an audience.

Wheatly, who recently reacquired digital radio station Jazz FM in a management buyout, plans to launch his company on the stock exchange. And what better way to warm up his investment audience than another series of Jazz in the City – a one-hour programme broadcast from 6-7pm every Monday evening? To underline the point, he’s managed to persuade Piers Currie, Aberdeen Asset Management’s marketing chief, to sponsor the programme and Stevie Spring, chief executive of Future, Sir Stuart Rose, formerly executive chairman of M&S, Charles Dunstone, founder of Carphone Warehouse and TalkTalk, Caroline Daniel, FT Weekend Editor and Peter Cruddas, ceo CMC Markets, to appear in it.

Wheatly – himself an accomplished jazz pianist – has already made one fortune from resurrecting Jazz in the mid nineties, floating it, then selling it on to Guardian Media Group for £44.5m six years ago. Clearly he has another one in view.


Low Grade performance at ITV

October 17, 2009

GradeIt’s a bit rich of Michael Grade, outgoing chairman of ITV, to blame the media for a mess substantially of his own making.

Here’s a sample of Grade in action. Asked by Lord Fowler, chairman of the House of Lords communications committee, whether he was surprised about the length of time the process of finding a successor was taking, Grade replied as follows:

“What surprises me is the extent to which this has been played out in the public arena, which is unfortunate. We are certainly not short of advice from our colleagues in the fourth estate. Coming into work each day, I feel as though I am inhabiting a parallel universe…the ITV business is going very well.”

Really, Michael? If it were going that well, you would still be in a job and we would be deprived of a riveting media circus, featuring acts of startling incompetence by leading ITV executives, non-executive directors, head-hunters and, last but not least, ITV shareholders. Thank goodness some of the people below board level seem to know what they are doing.

Unpicking all this: once Grade’s ‘high-production value’ strategy was poleaxed by the recession, he was toast. Herein lay the first problem, because he then proved as amenable as a sea anemone asked to vacate its favourite rock at low tide. All right, he’d give up day-to-day management as chief executive, but he was going to cling on to being chairman come what may, albeit of the non-executive variety.

Grade’s contempt for corporate governance (the Higgs Report specifically calls for the roles of ceo and chairman to be split in public companies) is a lesson for us all and Sir Stuart Rose at Marks & Spencer in particular. Allowing Grade to combine the two roles in the first place was a fiasco in the making for which the ITV board and shareholders must also bear responsibility.

We are now seeing the results of that misjudgement played out. Grade, in staying on, evidently hoped to persuade some youngish, pliable patsy with digital experience to be chief executive, while he continued to lord it over the board. Simon Fox, ceo of a resurgent HMV, self-evidently had the digital experience, but proved no one’s patsy when he turned the job down. Matters were not helped at this juncture by a group of self-appointed ‘activist’ shareholders (Legal & General, Brandes and Fidelity), who insisted on having Tony Ball as ceo come hell or high water.

Ball is an able executive, who did well at BSkyB. But there were two things wrong with his candidature from the start. To begin with he is very greedy. His demands (a package of up to £30m over 5 years was reported) were politically unacceptable in the present climate and caving in to them would have made Sir James Crosby, the ITV non-executive director charged with finding a Grade replacement, look even more foolish – if that were possible in the wake of his ill-judged escapades as HBOS chief. Then again (not that this troubled our militant shareholders), no one who actually worked at ITV seemed to want Ball. Why? Because it would be like letting Alaric the Goth into Rome: after comprehensive sacking, the place would never be the same again.

As it turned out, these anxieties were academic. Ball over-reached himself, not only with the grossness of his financial demands, but in his determination to put his stamp on Grade’s successor as non-executive chairman. Only then did the ITV board and Russell Reynolds the headhunters seem to wake up. They’d got it all topsy-turvy: sure, they needed to replace Grade, but it was the wrong Grade they were replacing. Grade the chairman should have preceded Grade the ex-ceo. Duh! At least Grade has now had the grace to do what he should have done months ago: step down unequivocally.

Has the selection “committee” learned anything else from its mistake? Not really. Shareholders still seem set on a deluded course of appointing a chief executive whose brief is to be “anyone but ITV chief operating officer John Cresswell or any other ITV insider.” If I were Cresswell, I too would be leaving – having been bridesmaid at too many weddings.

Which is unfortunate, since Cresswell is rapidly emerging as the only sound candidate for ceo by default. Anyone who, like me, has grown a little confused about who remains in the race would do well to turn to Mediaguardian, where they will find a handy visual device entitled The Big Cheese Chart. It’s a perceptual mapping graph that plots the fortunes, or otherwise, of those who are contending for the crown jewel roles at ITV and Channel 4. To outward appearances, the process of digging ITV out of the mire looks stalled. All the credible City types selected by shareholders as suitable chairmen have ruled themselves out, with the exception of former BBC chairman Sir Christopher Bland. And without a chairman, there can be no hope of a chief executive either.

Interestingly, given the unpromising turn of events, ITV’s share price has soared 16 % this month – well above the market average. I would put this down less to the fact there is about to be a resurgence in the media sector’s fortunes and more to the fact that ITV has become such a basket case that only a takeover of some sort can solve its problems.

The question is, who would want to take it over? Whoever these people might be, they’ve already missed a bargain-basement opportunity, when the ITV share price was in the low 20ps earlier this year (it’s now back to about 50p). And that’s not even to consider any other obstacles in the way. Such as: ITV no longer has a USP, it has no credible digital strategy, a huge pension deficit and an over-manned sales force.


Is Sainsbury’s King’s crowning achievement?

May 19, 2009

 

Justin time?

Justin time?

Another set of dreadful results from Marks & Spencer: annual pre-tax profits down nearly 40%, and the dividend sliced by a third.

Could anyone else, in the circumstances, be doing a better job than executive chairman and retail doyen Sir Stuart Rose, who must shortly retire from M&S? Headhunters are actively putting together a list of potential successors. Strongly favoured is Justin King, who has turned around the once-hopeless case of Sainsbury’s. King says he’s not for sale, at the moment. All the same, he’s beginning to look like the uncrowned monarch of British retail.

More on King’s reputation in this week’s column, out tomorrow.


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