Those not so retiring types: Are they founts of wisdom or just stubborn old timers? Richard Thomson asks whether some of Britain's company leaders may be holding on to the reins of power far longer than they should be

Click to follow
The Independent Online
ON 29 JULY, Lord Weinstock will be popping the champagne corks and celebrating his 70th birthday. Shortly thereafter he will be up for re-election as GEC's chief executive, since the Companies Act requires all directors over 70 to stand for re-election each year. Many of the company's shareholders, irritated by what they see as a stubborn old man refusing to make way for new talent, will vote against him.

In all likelihood, Lord Weinstock, who has headed GEC since 1963, will hang on to his job. He is so confident, indeed, that last week he gave notice that he would be staying on for at least another two years. But the attainment of his seventies has raised, once again, a problem that periodically tortures British business: the wrinklies in the boardroom.

Some of our most prominent businessmen have reached an age at which most men would long ago have hung up the executive suit to potter about in the garden shed or spend their afternoons dozing in the golf-club lounge. In an era when early retirement (whether voluntary or obligatory) has become increasingly common for middle-aged executives, the way that some old men hang on to their positions as chief executive, or chairman, or president, seems perverse.

It has led to a quiet, behind-the-scenes conflict with the City's professional investors, who have become less and less tolerant of aged hands on the reins of some of the nation's largest companies. 'We assume they will not do as good a job as a younger man,' said one institutional investor succinctly.

In some circumstances, shareholder suspicion is only too understandable. When the Lords Hanson and White (then in their late sixties) breezed into the Hanson annual meeting two years ago, for example, Lord White looked worryingly unsteady on his feet. He tripped and nearly fell off the stage in front of the assembled shareholders. Observers were deeply shocked at his apparent frailty. Inevitably, speculation intensified from then on over the succession at the top of Hanson.

But how many of these boardroom oldies are there? Who are they? What do they contribute? Are they up to the job? And should they be there at all?

There are 232 directors of public companies aged 70 or more. The number was even higher in the 1960s and early 1970s, when some companies had whole boards around this age. But the management revolution of the 1980s, which brought in new styles and swept away most of the old generation of business leaders, changed the scene radically. A few companies even have an obligatory retirement age - which is why Sir John Harvey-Jones, aged 69, has been trouble-shooting on TV since he was obliged to retire as chairman of ICI at the age of 60. Yet many executives stay on and on, and advanced age still commands respect in a large number of companies.

Britain's oldest director lives in a nursing home. Mrs Dorothy Bailey, aged 90, was born in 1903 and was already 15 years old when the First World War ended. She is on the board of her family's firm, C H Bailey, the Cardiff-based ship repairer.

Her son, Christopher Bailey, the company's chairman, is still in his sixties, but other members of the board include David Bradford, 79, Frank Marmaduke Norfleet, 76, and Thomas Bishop, 72.

It is fairly common among family companies for there to be a few elderly directors, frequently family members. In the case of C H Bailey, outside shareholders would have little chance of changing the board membership since the family owns special 'B' shares, which carry 100 times the voting power of the ordinary shares.

Hotel, leisure, property and newspaper groups all seem to have a tendency to have directors of an advanced age, probably because many of them are, or were, family-dominated or family-owned.

Sir Charles Hardie, who ranks about 11th among Britain's oldest directors, is the last of Sir Charles Forte's former colleagues still on the board of the Forte Hotels group.

Lord Delfont, 85, helped to found First Leisure Corporation, the disco to bingo-halls group, and remains as the company's president, while Sir John Woolf, 81, is a director and Lord Rayne, 76, is chairman.

Even more remarkable is the Telegraph newspaper group, where several directors appointed by the previous owners, the Hartwell family, have been kept on by Conrad Black.

Indeed, the Telegraph can claim to have one of the highest average ages of any boardroom in the country. The list of senior citizens includes Lord Hartwell himself, 83, Viscount Camrose, 84, Harbourne Stephen, 77, Lord King, 76, Lord Carrington, 75, Lord Rawlinson, 74, and Sir Frank Rogers, 74.

In the property sector, Isidore Kerman, 89, and Edward Erdman, 89, remain active as non-executive directors to various companies. And in the investment sector, the long experience of older men appears to be highly valued, with Lord Cayzer, 84, at Caledonia Investments (although this is also a family company), Philip Macmillan, 80, at London Finance & Investment Group, James Liggat, 80, at CSC Investment Trust, Patrick Hawkings, 80, at London & Associated Investment Trust, Gerald Ashfield, 83, at Danae Investment Trust, and George Ross Goobey, 83, at Warnford Investments, to name but a few.

Ironically, it is the institutional investors who are most opposed to such old boys on company boards. In an ideal world, many would like to see no aged directors. 'I cannot think of any really outstanding chief executive over 70,' said one leading investment executive whose funds have a policy of objecting to directors over that age. 'We like to see directors retire at 70,' said another.

Alastair Ross Goobey, head of Postel, the Post Office pension fund, is uncompromisingly critical of wrinklies hanging on to directorships. 'My father is 83 and still chairman of a public company. He's got all his marbles, but we would vote him off the board if we owned shares in his company,' he said.

The primary worry, of course, is whether anyone over 70 - already 5 or 10 years over normal retirement age - still has all his faculties, let alone the ordinary energy and alertness required to do a thorough job as a director. Clearly, people differ in this respect.

'I believe it is absolutely individual,' said sprightly Lord Delfont. 'Some men are old at 70 or even 60. To me, however, 85 feels young. When they discovered at Thorn EMI that I was 73, they said I was too old and forced me to resign. It was a bit of a shock, but I went off and started First Leisure when I was 74. I never want to retire.'

He believes, however, that elderly men should give up executive roles and stand back as advisers in non-executive positions. 'When it comes to advice, I'm OK,' agreed Edward Erdman, the 88-year-old director of Chesterfield Properties. 'But younger men should do the executive jobs.'

Both he and Lord Delfont agree that it is up to the non- executives of a company to keep an eye on their elderly colleagues' performance. Yet the fear of most institutional shareholders is not so much that aged directors will go senile, but that their hanging-on will have a damaging effect on the company in other ways.

Is it true, for example, that old men have invaluable advice to offer because of their long experience - or are they just dangerously out of touch?

'Younger people who've been to universities and have a handful of degrees haven't got the street knowledge, nor have they dealt with all the honest people and crooks that I have,' argues Edward Erdman.

Many fund managers say this is nonsense. Alastair Ross Goobey believes that long experience is over-rated and can be a serious hindrance to a company's performance. 'On the whole, people over 70 find it harder to adapt. Even if they have good memories they are less flexible and that outweighs the benefits of their experience.

'I once worked with a man who remembered the Great Crash. This coloured his whole outlook. When it came to the end of 1974, after the slump, and the markets were turning up, he remained very bearish, which caused considerable problems for us.'

In any case, many of the elderly set have been running their companies for so long they have simply run out of steam and new initiatives. 'Boards need refreshment,' said one fund manager. 'After 10 years a chief executive is unlikely to have any new ideas.'

Lord Weinstock has come under persistent criticism for this over the years.

The problem gets compounded if the old man has, over the years, packed the board with yes-men who will not contradict him or come up with alternative viewpoints. His own outdated attitudes go unchallenged and, according to one City investor, 'that saps all the energy and initiative from the board'.

Most of the well-known entrepreneurs of the 1970s and 1980s, who long ago qualified for a pension, have been accused of this at one time or another. Roland 'Tiny' Rowland, now aged 76, was notorious for filling the Lonrho board with those who would not question his judgement. Unimpressed, the institutions would not invest in the company's shares for years. Lord Hanson has come under fire for this in the past, as had Lord Weinstock.

Disgruntled shareholders point out, moreover, that the longer old men cling on at the top, the more likely they are to block the promotion of able, ambitious, younger colleagues. The risk is then that the company's best and brightest talent will simply leave to find more promising pastures elsewhere, leaving a severely weakened senior management.

'I agree it can block off promotion to younger men,' conceded Lord Delfont. 'It is important to have lines of succession set up.'

The succession question, indeed, is considered crucial by most professional investors.

'We don't always insist on immediate retirement at 70 as long as we know that the question of succession is being addressed,' said one. Shareholders suspect some old men of being too jealous of their power to pass it on to anyone else. The company then risks being left rudderless if the aged chief executive or chairman drops in harness.

The difference here between Lord Hanson and Lord Weinstock is striking, as on most other points to do with ageing executives. Institutional investors are satisfied that Lord Hanson has sorted out his succession - Derek Bonham is the heir apparent and they expect Lord Hanson to step down within 18 months. In any case, the company is performing satisfactorily - so impatience with Lord Hanson's age is muted.

Lord Weinstock, however, is going on for at least another two years and has not settled the succession question. Some institutions suspect him of the sin of trying to engineer a dynasty by installing his son, Simon. Their annoyance is heightened by GEC's poor performance, which suggests to many that Lord Weinstock should leave now.

Naturally, there is little patience among ageing businessmen themselves for the carping of shareholders. 'Lord Weinstock is as bright and on the ball now as he was when he was 60,' said Lord Chalfont, chairman of VSEL, aged 74.

Many elderly executives have fought off all attempts to get rid of them with the same tenacity they used in getting to the top in the first place. In many cases, they have been so long at the head of their company that their position is virtually unassailable either by the board or shareholders.

This is at the root of Lord Weinstock's complacent view that he will still be running GEC in two years' time. He may be right in thinking he will be. But he will at least have to justify his position every year to his less happy shareholders. And unless GEC's performance improves dramatically, that may be no easy matter.

----------------------------------------------------------------- TEN OF THE OLDEST ----------------------------------------------------------------- Director Company Age Dorothy Bailey CH Bailey 90 Isidore Kerman Bristol Scotts 89 Edward Erdman Chesterfield Properties 89 George Szpiro Wintrust 87 Viscount Camrose Telegraph 84 Lord Delfont First Leisure Corp 84 Lord Cayzer Caledonia Investments 84 Sir Charles Hardie Forte 84 Lord Hartwell Telegraph 83 George Ross Goobey Warnford Investments 83 -----------------------------------------------------------------

(Photographs omitted)