Pressure grows on Gas boss
Monday 05 February 1996
Big fund managers are set to call for the head of Cedric Brown, the chief executive of British Gas, amidst evidence of a growing boardroom rift.
Richard Giordano, the chairman - who is himself under attack - is making life difficult for Mr Brown, and is pressing for his retirement ahead of the planned date at next year's annual general meeting.
The three non-executives - Lord Walker, the former energy minister, Dixon's chairman Sir Stanley Kalms and Roger Boissier, chairman of Pressac Holdings - are also under pressure to go. Along with Mr Brown, they are being targeted by City investors as part of the "old guard", which is held responsible for having led the company into its present mess.
Most of the former executive members of the board have left since October - in what has already been the most extensive boardroom clear-out since privatisation in 1986, prompted by a catastrophic year for British Gas. The company has seen its share price plummet, is facing massive losses on "take-or-pay" gas contracts and is facing a big cut in its market share as the gas market is rapidly opened up to new competition.
Institutions are ready to support what looks like increasing concern among the new executive directors at the performance of the non-execs and are also directing their fire at Mr Giordano.
The head of one big institution said yesterday: "The British Gas affair looks a sorrier and sorrier state of affairs as things develop and Giordano has to take a substantial share of the blame for the whole debacle. The board has not got a grip on things and has allowed things to develop. ... [Giordano's] reign there has been nothing short of disgraceful."
He described the attitude of the non-executive directors as "supine" and said, if they had not done anything to prevent what has happened, he would favour their departure.
Another fund manager contacted yesterday said he was not altogether surprised by the turn of events at British Gas. So far institutions have held back from putting direct pressure on the company. But there is growing evidence of readiness to step in unless there are signs of quick action by management.
British Gas would not itself comment on weekend press reports of the boardroom row. A representative said yesterday: "As you can imagine, we are not commenting on articles which are pure speculation. Cedric Brown is the chief executive and that remains the position. Anything else is pure speculation."
But a source close to the company confirmed there was speculation within British Gas that Mr Brown will leave ahead of his planned retirement date.
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