Outlook First Standard Chartered, then Experian, and now Sainsbury’s. It’s shaping up to be a year of boardroom upheaval, and it’s still only January. Who next? Well, a little bird tells me Schroders’ veteran chief executive Michael Dobson has sounded out confidants in the City about the idea of him becoming chairman of this granddaddy of fund managers, succeeding 69-year-old Andrew Beeson.
This would be an extremely bold (for which read, bad) step for the board to take. Having your chief executive go up to become chairman is a big no-no in corporate governance terms. The thinking is that the chairman is meant to be an impartial check on the executive board – a chap (and it almost always is a chap) with the resilience and independence to give the boss a slap once in a while when ego, or bad judgement, threatens the interests of shareholders.
In Schroders’ case, this theory applies more than in most corners of the FTSE 100. Mr Dobson has been running the shop, rather well, since 2001. That makes him far from impartial. Schroders is not like most FTSE companies. It’s still 40-odd per cent owned by the family (no bad thing, that). Bruno Schroder, 81-year-old great-great-grandson of the founder still sits on the board, while family member Philip Mallinckrodt is a main board director, heading up the wealth management arm.
Such family involvement, and major league share ownership by directors, should, and does, create a welcome spirit of long-termism. But it also makes it more important to have a truly independent chairman to represent the interests of those shareholders not in the family fold.
However, in the case of Schroders, the problem’s more than just that. Politicians and small shareholders repeatedly urge fund managers to become more engaged in forcing companies in which they invest to have good corporate governance. If one of the biggest fund managers in the country flouted the most basic of rules, it would tarnish the whole industry.
I should point out that the company denies any such changes are afoot, and that Messrs Dobson and Beeson ain’t going anywhere for years to come. Let’s hold them to that.