Business 2017: the winners and the losers
As always it was a year of ups and downs, as Michael O’Leary, Theresa May and Bono can attest
Winner: Deirdre Somers, chief executive of the Irish Stock Exchange, which in November agreed a sale to Euronext. A group of Irish stockbrokers will share a windfall of €158.8m as a result. Photograph: Alan Betson
Robert Pitt, erstwhile chief executive of Independent News and Media, and chairman Leslie Buckley. Photograph: Dara Mac Dónaill
Harry Hughes, chief executive of clothing company Portwest, won the EY Entrepreneur Of The Year award for 2017. Photograph: Alan Betson
British prime minister Theresa May: deserves a special mention for service to the Brexit fantasy. Photograph: Peter Byrne/PA Wire
Blink and you’ll have missed it, but that was 2017, the year in which Brexiteers discovered Ireland on a map (sort of), Bono discovered he was big in Lithuania and Michael O’Leary discovered contrition.
Sandwiched between Westminster and the White House, Ireland claimed a stake to relative sanity in a world gone flat-out farcical, but that didn’t mean there were no opportunities for leading business figures, bored by the economic recovery, to make things complicated for themselves.
There were people who wanted in, people who wanted out, people who got up early in the morning, people who couldn’t sleep at night. The winners finished the year flying high in their Isle of Man-registered helicopters. The losers were ensnarled in cross-city Luas traffic.
Let’s start with the winners. When then taoiseach Brian Cowen (remember him?) claimed in 2010 that multilingual business process outsourcing company VoxPro was a “strong example” of a company that would fuel export growth through “clever use of technology” and that it had “good capable people at the helm”, let’s just say this was one of the occasions when he was right.
Voxpro, founded by Dan Kiely and Linda Green-Kiely, began a winning streak that culminated with the August sale of the Cork-based business to Canadian outsourcing giant Telus International for an estimated €150 million, triggering a bumper pay day for the couple. A company that started out with six people working above a pub on Cork’s Marlboro Street and was once “48 hours away from going out of business” during the credit crunch, now employs 2,700 people worldwide.
“You have to be a lunatic to run your own business,” Green-Kiely said after the sale went through. But they hadn’t actually been planning to sell Voxpro, she said. “It is hard to part with your baby.”
Mayo couldn’t claim every title this year, but it did take home the EY Entrepreneur of the Year award thanks to Harry Hughes of Westport-based speciality clothing company Portwest, which makes personal protective equipment, workwear and outdoor leisurewear sold in more than 100 countries.
“This is a total shock for me,” said Hughes on receiving the honour at a gala dinner in October. “It’s a big win for Mayo but also a big win for all family businesses.”
Cheers, Harry. Hughes runs Portwest with brothers Owen and Cathal and there has “barely been a cross word” between them in 30 years. Together they also marked 2017 by completing the purchase of Westport House and estate, a heritage attraction that traces its history back to the 16th century when Grace O’Malley, Pirate Queen of Connacht, ruled the surrounding lands and seas. Portwest itself is no newbie, dating back to 1904, but that it now boasts a 600-page catalogue printed in 26 languages is testament to Hughes.
Pirouetting swiftly on: Ballet aficionado Justin Bickle belongs to a select group of individuals whose activities are covered by both London theatre weekly The Stage and Irish Building Magazine. When he’s not occupied by his role as chairman of the English National Ballet (ENB), Bickle is chief executive of Glenveagh Properties, the Irish housebuilder, which in October executed its initial public offering (IPO) in style.
The ENB is on a mission to make dance relevant and accessible while maintaining the highest of artistic standards: Glenveagh’s task is equally delicate. It has set itself a target of building 1,000 new homes a year by 2020, rising to 2,000 by 2023.
For their trouble, Bickle, executive chairman John Mulcahy (a former senior Nama official) and chief operating officer Stephen Garvey have been given “founder share” incentives that allow them to receive up to 20 per cent of total shareholder return over a five-year period, plus discretionary bonuses of up to 100 per cent of their basic salaries. That’s some clever choreography.
Two years ago, the flotation of Cairn Homes marked the first IPO of an Irish housebuilder since the late 1990s. In September, chief executive Michael Stanley and his Cairn co-founders, brother Kevin Stanley and Scottish entrepreneur Alan McIntosh, took €26.6 million off the table by selling a combined 2.1 per cent stake. Thanks to its version of a founder shares scheme, the company has turned into a wheel of fortune for the trio, barring disasters. Why it’s almost like there’s money in this property game again.
Cairn’s empire expanded this year when it saw off four other bidders in the final round to snap up almost nine acres of RTÉ’s Montrose campus. It paid a pretty price for the pleasure at €107.5 million, but for Michael Stanley this was a “once in a lifetime chance” to build 500 apartments and 10 houses on a prime Dublin 4 site. These properties may not, like Westport House, be blessed with promenades and chandeliers and Sicilian marble staircases, but they are likely to have premium price tags in a market that couldn’t rise quickly enough for some, but is swelling miserably fast for others.
It was a year of high performance for Siobhán Talbot, group managing director of Glanbia, aka Ireland’s most senior businesswoman. Talbot, who took home €2 million in remuneration in 2016 after a better-than-expected set of earnings, oversaw a long-desired deal to spin out a majority stake in its Irish dairy and agribusiness interests to its largest shareholder, Glanbia Co-op, creating a new entity called Glanbia Ireland.
Talbot’s predecessor John Maloney had tried to get a similar deal across the line in 2010 with no luck. Half-year results showed that the mozzarella-producing company continues to be a big cheese in the cheese business, while it now also controls about 13 per cent of the world’s €10 billion performance nutrition market. That has to be worth a protein shake or two in celebration.
Also getting a deal over the line in 2017 was Deirdre Somers, chief executive of the Irish Stock Exchange, which in November agreed a sale to Euronext, the operator of the Paris, Amsterdam, Lisbon and Brussels exchanges. A group of Irish stockbrokers will share a windfall of €158.8 million as a result.
The 224-year-old company avoided the wave of mergers between bourses over the past two decades, but its much-prized independence was no match for the logic of post-Brexit opportunities once the UK decided it wanted out of the European Union.
Somers, who will sit on Euronext’s managing board, had made it her resolution for 2017 to find a buyer or strategic partner that would give it the capabilities to build its funds listing business and lure London-based companies to take out a dual listing in Dublin.
“I never saw being bought as a particularly clever thing to do,” she said, “unless it was for a very clear purpose.”
Robert Pitt, erstwhile chief executive of Independent News & Media, is someone else who takes mergers and acquisitions seriously. By the end of the year, Pitt (47) was out of his job, but he departed the newspaper group with his head held high and his reputation for stubbornness-under-pressure sealed after a dispute with chairman Leslie Buckley, an associate of INM’s biggest shareholder Denis O’Brien, about how much INM should pay for O’Brien’s radio Newstalk.
The rift, which unfolded in the latter months of 2016, deepened in 2017 and by the time of INM’s August extraordinary general meeting, the two men were no longer prepared to sit side-by-side. And let’s just say that when they were photographed walking past one another, neither stopped for a hug.
Pitt’s whistleblower complaint to governance regulator, the Office of the Director of Corporate Enforcement, meant Buckley ended the year being investigated by the corporate watchdog, while former chief executive Gavin O’Reilly helpfully chipped in with the observation that corporate governance at INM was “a bit upside-down”. The stand Pitt took may have cost him his position, but frankly the phrase better-off-out-of-it springs to mind.
And now we move on to losers.
Michael O’Leary is a veteran of the “winners” half of this annual Irish Timesfeature, but 2017 was not his finest. Amid the cancellation of 20,000 flights due to pilot rostering issues, the Ryanair chief executive declared himself “very contrite”. He did so before an ironic “Always Getting Better” Ryanair advertising poster that featured three “cabin crew” blowing kisses as if they were his back-up singers and he was about to break into a searing rendition of Sorry Seems to Be the Hardest Word.
The big brand damage for Ryanair was not the number of cancellations, but the delay in issuing a list of the affected flights, meaning confused passengers had to wait to find out if they had won or lost in this lottery. There was no dash for the emergency exit.
“I don’t think my head should roll. I need to stay here and fix this,” O’Leary said. Well, he’s very well paid for doing an easy job, right pilots?
Ryanair may have stopped short of a tailspin, but by the end of 2017, its pan-European industrial relations turbulence was building. Ironically, its reputation wouldn’t have suffered as much if it hadn’t adopted a new “caring and cuddly” approach in 2014 and instead stuck with its well-honed image of the airline that everyone loves to hate.
One chief executive who was ushered into the departure lounge this year was Owen Killian, who, until February, was chief executive of Swiss-Irish baked goods group Aryzta. Killian, a self-confessed “card-carrying workaholic”, was once one of the highest paid executives in Ireland, but by the time 2017 came around, he was no longer on a roll. Amid falling profits linked to the loss of contracts and the price Aryzta paid for a 49 per cent stake in French frozen-food company Picard, his recent executive record was starting to look, well, half-baked.
Perhaps it was his “paranoia about becoming irrelevant” (in business) that had prompted the missteps, but after two years of heat, the cookie finally crumbled and Killian was out. On the day of his resignation, alongside that of chief financial officer Patrick McEniff and Americas region boss John Yamin, Aryzta’s shares soared by as much as 21 per cent. The verdict was in. Killian was no longer star baker.
For publican Frank Gleeson too, it was a frosty start to 2017 and not just because the nation’s pub-goers hibernate in January. The one-year-old marriage between his Mercantile pubs group and Capital Bars, backed by Danu Investments and US-based EMI-MR, was heading for divorce. A year after Gleeson had cheerfully got into bed with the US-Irish consortium, forming an enlarged group in which he had only a minority stake, his new business partners were attempting to remove him as chief executive. Their gift to him last Christmas was a document bluntly titled “Notice of Garden Leave”.
Three separate legal actions ensued. In February, Gleeson accused his fellow shareholders of “concerted shareholder oppression”, sending them a letter on St Valentine’s Day that alleged they were engaged in “a campaign of corporate thuggery”. Claims and counterclaims were heard in court, but the cases were later struck out after an agreement that saw Gleeson exiting the group with restaurants Green Hen and Marcel’s and the bar Farrier & Draper to his name. Pints of bitter all round.
The latest leak of offshore tax documents, known as the Paradise Papers, was a crowded beach of big fish when it was spread across the world’s media in November courtesy of the International Consortium of Investigative Journalists (ICIJ). It was true that not all of the wealthy and powerful to feature in the cache of financial secrets were equally so: Mrs Brown’s Boys’ actors Fiona Delany, Martin Delany and Paddy Houlihan are not, to be fair, in the same league as, say, private jet-loving US treasury secretary Steve Mnuchin.
Maybe no one was much surprised when legendarily tax-efficient U2 frontman Bono was unmasked as an investor in a shopping centre in a small town in Lithuania called Utena – an investment he naturally made through a company based in Malta. But it was officially the least rock and roll thing ever done.
The Edge helpfully contributed comments that didn’t exactly sound like a ringing endorsement of Lithuanian retail as an investment option. “We do understand why people are angry with the system as it is. It definitely needs an overhaul,” was his take on the plethora of offshore tax arrangements that somehow manage to ensnare innocent rich people into their morally dubious webs.
Another system that was plainly in need of an overhaul in 2017 was Irish banking. (Delete “2017” and update with year of relevant scandal, as appropriate.)
This time the disgrace concerned tracker mortgages. It emerged that more than 33,000 borrowers had been victims of sneaky, post-crash tactics by lenders to push customers off loss-making trackers into loans with higher interest rates and, therefore, higher monthly payments. Some people lost their homes.
With Bank of Ireland the biggest offender – some 14,500 of its customers are due compensation, a third more than the number identified at any other bank – the record of former chief executive Richie Boucher, who led the bank from early 2009 until October this year, was definitively tainted. A legalistic approach by Boucher’s regime to the Central Bank’s investigations into the affair was blamed for a delay in confirming many of its victims.
Not only did new boss Francesca McDonagh have to show up to an Oireachtas finance committee hearing to apologise for practices that took place under her predecessor but, in November, the bank announced that its original provision of €26 million for compensation payments wasn’t anything like enough: €200 million was closer to the mark.
Meanwhile, thanks in part to Boucher and his counterparts across Irish banking, the question “what is a tracker mortgage?” was the fifth most common “what is?” question typed into Google in Ireland this year. Some of us are fated never to know.
This traditional winners and losers rundown tends to restrict itself to Irish business matters, lest we require planning permission to print it. This year, however, an exception will be made to bestow a special overseas award upon a trio of 2017’s biggest losers. Imagine it as an honorary knighthood/damehood, but very much in reverse.
For services to Brexit fantasy, step forward British prime minister (at the time of writing) Theresa May, Brexit secretary (at the time of writing) David Davis and foreign secretary (at the time of writing) Boris Johnson. Tory Brexiteer Michael Gove would have made the cut, too, but thankfully he’s not important enough – at the time of writing.
Johnson flew into Dublin blustering on about a Guinness he had in Nigeria while Simon Coveney gamely tried to educate him about a hard border. Spiritually, Johnson didn’t leave Borisland all year.
Davis, having said he was producing a sector-by-sector analysis of what will happen when the UK leaves the EU, forgot his homework, then lost his homework, then said he hadn’t done his homework after all. It was almost as if this whole Brexit thing didn’t have massive consequences that will affect the majority of the population in Britain and Ireland.
Speaking of majorities, May threw hers away in a June general election she didn’t need to call. It could happen to anyone, perhaps, but not everyone would have claimed during the campaign that Brussels was trying to influence the result by making “threats against Britain” – extraordinary remarks that exemplified the depths to which Downing Street had sunk.
Brexiteers spent much of 2017 wanting to have their cake and eat it on the sunlit uplands. As the year sped to its confused conclusion, the more fitting meal appeared to be chlorinated chicken, followed by a dessert of Eton Mess. A complimentary cough sweet may accompany the legally binding bill.