Experian shareholders ready to revolt as chairman’s exit fails to allay concerns

Merrion Hotel will be arena for Irish-domiciled FTSE 100 company’s AGM

Dublin’s Merrion Hotel is to be the setting for the latest shareholder revolt. Photograph: Alan Betson

Dublin’s Merrion Hotel is to be the setting for the latest shareholder revolt. Photograph: Alan Betson

Wed, Jul 16, 2014, 01:00

The Merrion Hotel in Dublin is to be the setting for the latest shareholder revolt, as investors in the FTSE 100 credit-checking company Experian gather today for their annual meeting.

For Sir John Peace, the “serial” Footsie chairman, it will be his third bruising encounter with investors in as many months. Last week, wearing his Burberry hat, Peace was subjected to one of the biggest-ever revolts on pay, as 53 per cent of the luxury fashion group’s shareholders voted against a lavish £20 million (€25.3 million) pay package for new chief executive Christopher Bailey.

In May, more than 40 per cent of shareholders in Standard Chartered, the third FTSE 100 group chaired by Peace, cast their votes against the bank’s remuneration report at a hostile annual meeting.

Peace steps down as head of the Experian board today, but his imminent departure has done nothing to soothe shareholders. In fact, it’s his replacement as much as the group’s pay policies that has angered its investors. Instead of bringing in an independent, outside candidate, the new chairman is to be chief executive Don Robert, and replacing Robert in the chief executive role is finance director Brian Cassin.

That is in direct contravention of the UK corporate governance code, which explicitly states chief execs should not go on to chair the same company unless there are exceptional circumstances. Ahead of the annual meeting, Experian has argued Robert should take the role to ensure continuity, but investors are unimpressed.

Significant concerns

Oliver Parry, corporate governance adviser at the Institute of Directors, says he has “significant concerns” about the move. While Robert is clearly a key player at Experian, the desire to maintain continuity should not come at the expense of the board’s independent oversight over the company.

As Parry points out, the roles of chief executive and chairman are very different: the chairman’s role is to lead the board in oversight of the executive team, but without interfering in the operational management of the business.

As a former chief executive, Robert is likely to find this challenging, to say the least. And having your predecessor at the head of the boardroom table can make it extremely tricky for a new chief executive to run things the way he wants.

Personal criticism

Other shareholder lobby groups have also expressed concerns at the appointment, as well as at boardroom pay at Experian.

And there has been criticism of Peace personally from shareholders of all three of the FTSE 100 companies that he chairs – while multiple chairmanships might have been acceptable in the City a few decades ago, heading the board of a large public company, particularly one with a FTSE 100 listing, is generally regarded as a full-time job.

Even after stepping down from Experian, Peace will still head Standard Chartered and Burberry, although, given the extent of the shareholder revolt at both companies, he is likely to find it harder to hold on to both roles.

It’s unfortunate for Peace that he will be bowing out at Experian tomorrow on such a sour note. He founded the business more than 30 years ago, as part of GUS, then Great Universal Stores, floating it eight years ago. Its sales last year were little short of $5 billion.

Peace first announced his retirement from Experian in 2009, when he took on his role at Standard Chartered, but later reversed the decision, saying no suitable candidate had been found to replace him. Finding capable candidates to chair companies is undoubtedly hard, but not quite as difficult as Peace seems to be making out.

Had he quit Experian five years ago, as planned, he’d have had more time to devote to Standard Chartered and Burberry. And more time listening to shareholders’ concerns might just have averted the recent humiliating showdowns with shareholders.

Irish domicile

Experian was among the first of the UK companies to switch its domicile to Ireland for tax reasons, and has been headquartered in Dublin since it was floated out of GUS in 2006. As Britain’s tax rate continues to fall, some companies, such as WPP, have moved back to Britain.

There are no signs Experian plans to return, however. As well as Ireland’s tax advantages, it may be the company sees other plus points to its Irish domicile, such as holding its shareholder meeting in Dublin rather than London, ensuring that far fewer investors turn up to berate the board.

Fiona Walsh is business editor of theguardian.com

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