PROFILE: Richard Giordano; Steady hand on the safety valve

Patrick Hosking looks at the wealthy chairman of British Gas, who saved the skins of fellow directors as shareholders raged over colossal fees
Click to follow
The Independent Online
THERE was a moment at the rumbustious British Gas shareholders' meeting last week when even Dick Giordano, the ultra-smooth, unremittingly charming chairman, looked distinctly rattled. For a few minutes it seemed the furious shareholders would successfully call a vote of no-confidence in his handling of the meeting.

For three hours, more than 4,000 shareholders had flung a barrage of accusations, insults and complaints at the besieged directors. Giordano refused to be riled, politely batting back reasoned, if uninspired, replies to incensed shareholders.

But the mood, hostile at the start, was becoming revolutionary. By the time Ken Livingstone, the Labour MP and former chairman of the Greater London Council, got to the head of the questioners' queue, many shareholders were cheering him on and baying for blood.

Giordano's fellow directors, meanwhile, were not going down well. Cedric Brown, the chief executive at the heart of the pay row, was pugnacious and came close to losing his temper after being accused of misleading Parliament. Several of the non-executive directors, asked to justify their re-election to the board, put up feeble performances. The shareholders scented a rout.

It was Giordano who saved the day for his 13 fellow directors. By constantly pushing the meeting forward, by politely cutting out persistent questioners, by conveniently mishearing or misunderstanding points of order, he kept the barque from the rocks. And on that potentially lethal no-confidence motion, he called a company lawyer to the podium to explain to shareholders how, alas, a vote wouldn't be within the rules.

American-born Giordano - fixer, diplomat, confidant and adviser in half a dozen British boardrooms - was once again earning his colossal fees. Without him at the helm, it is quite possible the meeting would have ended in a dramatically different fashion.

It is those director's fees, of course, that have constantly put Giordano under the spotlight. In the early 1980s he repeatedly hit the front pages of the tabloids as Britain's highest-paid director. His yacht, his Cadogan Square flat, his Rolls-Royce Corniche all came under the spotlight.

His blase attitude to the sums paid to him and other senior managers have always made him great for a soundbite. Even after he was overtaken as Britain's highest-paid executive by Sir Ralph Halpern, then of Burton, he continued to attract media interest.

In 1991 he declared himself mystified as to the furore over pay rises for executives of privatised utilities: "It amazes me that what seems to me like quite a minuscule amount of money can occupy such a large amount of [media] space,'' he told the Times. What, in his terms, was minuscule? Someone, say, on pounds 170,000 getting a 20 per cent - or pounds 34,000 - pay rise, he said. It is Giordano's apparent failure to notice that, for most people, pounds 34,000 is anything but "minuscule" that has made him such good copy.

Today his known earnings amount to around pounds 800,000 a year, rather less than the pounds 1m a year he got as chief executive of BOC, the industrial gases group. His three-and-a-half days at British Gas earn him pounds 450,000 plus pounds 22,000 of perks. This is despite a company rule limiting directors' fees to pounds 300,000 - an apparent anomaly repeatedly raised at the AGM.

His deputy chairmanship of Grand Metropolitan, the drinks and burger bars group, earns him just over pounds 100,000. His non-executive chairmanship of BOC lands him another pounds 180,000 plus benefits. And he also receives $32,500 in fees from his directorship of the American paper company Georgia Pacific. He has other private business interests in the US, where he spends one-third of his time. In the past few years he has given up non-executive directorships at other blue chip companies including Lucas, RTZ, Reuters, Courtaulds and National Power.

He is unrepentant about the sums paid to Mr Brown. "There really is a 'pay for the job', even for chief executives," he told shareholders last week.

"Pay for the job which is set with reference to other executives in comparable situations. This is not a precise science, but it is certainly an established principle in industry." He puts his philosophy into action in other companies where he sits on remuneration committees - the panels which decide executive salaries. At Grand Met, the chief executive Lord Sheppard got pounds 834,000 last year. At BOC, his counterpart Pat Dyer got a pounds 620,000 package.

Giordano arrived at British Gas as a non-executive director in December 1993 and was appointed chairman the following month, replacing Sir Robert Evans. The contrast could not have been greater. Evans was plodding and tongue-tied; Giordano was urbane and devastatingly charming.

Only a year ago one profile writer, after waxing lyrical about his "movie- star good looks" and "melting brown sugar voice" found herself confessing: "I find myself dazzled by the clarity of his brain." Sleek, 6ft 3in, silver- haired and immaculately turned out, he once appeared on the Financial Times Best Dressed Businessmen list.

His standing in the City remains high. In the weeks before the AGM, he did the rounds of around 60 institutional investors, persuading them to vote for the management. "He did a pretty good job, putting the case for the new pay arrangements," one institutional investor recalls. It was his ability to count on the proxies of institutions, of course, that enabled him to crush the overwhelming opposition at last week's meeting.

He has allies across business and in politics too. He was given a knighthood in 1989, but as an American citizen cannot use the title Sir Richard. One old acquaintance is Lord Lawson, the former chancellor, who says: "I've known him for 15 years. When I was energy secretary I put him on to the board of the Central Electricity Generating Board. He's an outstanding businessman, very clear and decisive. What you have to remember is that he came from an American business culture where these high salaries are the norm for the big jobs."

But Giordano hasn't been able to disguise the series of blunders at British Gas in the18 months since his arrival. Customer complaints are up, profits are down and the company has suffered an unprecedented number of PR gaffes, starting with the disclosure of Mr Brown's pay rise, and continuing with embarrassing revelations about pay cuts for showroom staff, a slashing of the safety budget and the recall of Mr Brown by the Commons Employment Select Committee.

There were blunders too at BOC, where Giordano worked throughout the 1980s. According to Philip Morrish, the top-rated chemicals analyst at Smith New Court: "He came in and did all the obvious things - rationalising, restructuring and giving the company direction. That said, he did make some almighty cock-ups."

Expanding the unsuccessful carbon graphite business and failing to rid the company of the troubled health-care operation were two of these. But overall he delivered for shareholders, so much so that two years after resigning he was called back as chairman when his successor fell ill.

Richard Vincent Giordano, now 61, was born in 1934 in Manhattan, the youngest son of Italian immigrants. It was a prosperous upbringing: his father ran a clothing business. He did well at school, both academically and at sport.

"I was raised in a family where ambition was part of the decor," he once said. After a term doing engineering at Harvard, he switched to history and economics. He went on to Columbia law school. A job followed at the Wall Street law firm Shearman & Sterling.

A desire for excitement and a horror that he would still be doing the same job in 30 years persuaded him to quit. He got a job with a client, the commercial gas group Airco, at the age of 30 and rapidly ascended the management ladder. Two years later he was running half the company. By 1971 he was president.

BOC took a stake in 1973 and then launched a hostile takeover bid in 1978. It was a vicious battle with insults traded. BOC won and Giordano expected the instant sack. He bought a yacht, planning to sail round the world. Instead BOC asked him to move to London to run the entire group.

Colleagues describe him as solitary. He is divorced from his wife, Barbara, with whom he had three children, now grown up. He has homes in London and New York. He enjoys cooking. Evenings are usually spent entertaining business contacts at the opera or in restaurants. Business is all-absorbing: he once claimed not to have any non-work-related friends. The daunting challenge ahead at British Gas should at least satisfy that appetite for work.

Looking for credit card or current account deals? Search here

Comments