Board changes please investors

MAGNUS GRIMOND

Boardrooms at a whole series of Britain's big companies have trembled over the past year as an unprecedented list of long-serving managers have been suddenly and often brutally cast into the wilderness. But institutional investors - which have been behind many of the changes - are almost as one in welcoming the increased pressure on directors to perform.

Arguably the most spectacular shake-up was November's dramatic simultaneous departure from the board of Cable & Wireless of both Lord Young and James Ross, respectively chairman and chief executive, following a bitter public spat.

The issue in contention here, as with many of the other boardroom bust- ups, was the way the company has been led. Signs of a big split on the C&W board emerged in September when Duncan Lewis resigned after less than a year at the head of the Mercury Communications subsidiary, allegedly citing policy differences over the direction of the group.

There then followed an extraordinary public debate about the merits of Lord Young's near five-year tenure of the chair, culminating in November's dramatic denouement.

Almost as extraordinary a saga was Richard Reynolds's sudden exit from the board of GEC. Mr Reynolds, chairman of the GPT telecommunications operation, was apparently dismayed at being sidelined as the successor to Lord Weinstock, the legendary managing director who is likely to step down this year. But his decision also brought into the open a boardroom battle as to how the succession was being handled.

City investors are generally unsympathetic to these enforced career changes.

John Manser, chairman of Robert Fleming, said: "As a generalisation, the need to succeed is ever more present. Due to the quickening of business life, a relative small failure can turn into a disaster in a very short period of time." He believes it is good for company boards to know that they are accountable to shareholders.

Tom Crombie at Scottish Equitable echoed that thought. "Someone's got to be the fall guy and we shouldn't be too kind ... I don't think most of the [departures] were undeserved."