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TMCNet:  Business analysis: Corporate governance: Thrusting Experian chief executive into chairman's role should be a temporary measure, says Nils Pratley

[July 16, 2014]

Business analysis: Corporate governance: Thrusting Experian chief executive into chairman's role should be a temporary measure, says Nils Pratley

(Guardian (UK) Via Acquire Media NewsEdge) Fireworks are guaranteed at annual meetings chaired by Sir John Peace. At Standard Chartered in May, the rebellion over pay was 41%; at Burberry last week it was 53%. Now for something slightly different. At credit-checking firm Experian today the main event is succession. Sir John is hanging up his chairman's hat and passing it to Don Robert, the chief executive, who in turn will be succeeded by the finance director, Brian Cassin.


Too cosy? The Institute of Directors thinks so. Its corporate governance adviser, Oliver Parry, argues that "a desire to maintain continuity should not come at the expense of the board's ability to exercise independent oversight of the company". The IoD is in tune with the established UK corporate governance code, which says that a chief executive should not become the chairman of the same company.

The code is not cast in iron - "comply or explain" is the motto. But companies ought to have good explanations for non-compliance. In Experian's case, the argument seems to rely on little more than the fact that Robert has been a successful boss and losing his services would be a wrench.

But many companies, presented with the same situation, could make a similar plea. Almost all choose to follow the code, knowing that the greater danger can be group-think and a lack of objectivity. It's hard to understand why Experian thinks its position is so different. The IoD suggests Robert's appointment should be temporary. Good idea - boardrooms need fresh air.

(c) 2014 Guardian Newspapers Limited.

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