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Head that could roll at bskyb

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   http://www.thisislondon.co.uk/news/business/articles/timid70073?source=

http://www.thisislondon.co.uk/news/business/articles/timid70073?source=

The head that could roll at BSkyB
Chris Blackhurst, Evening Standard
6 November 2003

SIR KEN Morrison has a way with words. 'For the price of a non-executive I can get two checkout girls and that's money well spent.'

Try saying it in a thick, Yorkshire accent and the sense from Sir Ken, redoubtable head of the Morrisons supermarkets chain, that non-executive directors are a frippery should come across loud and clear.

He is not alone. The late Tiny Rowland once described non-execs as about as useful as baubles on a Christmas tree.

Many company bosses echo the view in private but not in public - not in these PC days of Higgs and corporate governance codes and institutional shareholders who like flexing their muscle. It's all gone a bit mad: fund managers who invested in a company and its chiefs suddenly demanding their heads.


Do institutions not have fat cats? Did the City just wake up to Michael Green? Have not banks and City firms down the ages passed their leadership from father to son?

But none of that has stopped the new 'active' shareholders from having a rare old time. Shouldn't all fund managers be active? Have they just become active? What were they doing before? No, don't bother trying to answer. They can say what they like, do what they like, they are the masters now.

The result is an almighty mess. Rupert Murdoch's son James is to take over as chief executive of BSkyB. Rupert is chairman and speaks for 35% of BSkyB shares. James, 30, has cut his teeth running Star, an Asian TV station, for his father. On the basis that whoever does the job has to get on with Rupert, you'd think his appointment was a given. After all, his predecessors were hand-picked by Murdoch. The only difference is that James is his son.


Because of the age in which we live and heightened sensitivities, we have been treated to a delightful pantomime of headhunters being appointed to scour the world for someone Rupert would prefer over his own son and, bless his fine, silk socks, old Norman St John Stevas overseeing the search as the 'senior non-executive director' on the BSkyB board.


In the end, surprise, surprise, only one name was submitted to the board for approval, that of James Rupert Murdoch. And, shock, horror, they voted unanimously in his favour.


It's lovely, crazy stuff. Shareholders, powerless to resist his anointment, are apparently jumping up and down. In public, they're certainly saying some things but in private they're holding on to their shares so they must have some faith in the whipper snapper. Or perhaps they mean what they say - in which case, their clients may want to know why they're not selling. Next week, they'll get their revenge in this weird cat-and-mouse game that has beset the City in 2003 and seek Norm's removal.


Will Rupert be shaken to the core if Baron St John of Fawsley has to depart? You must be joking. It is unlikely tears will be shed for the saintly lord over the Murdoch dining table.

Rupert could do worse than study his colleague's Who's Who entry. St John has sat on the BSkyB board for 12 years. The company's annual report tells us he was paid £40,673 last year. But nowhere in the fulsome list of his achievements, high political office and publications, is there a mention of his BSkyB directorship.


He's the former Master of Emmanuel College, Cambridge, ex-Conservative MP and Chancellor of the Duchy of Lancaster, Leader of the Commons and Minister for the Arts. He's the Grand Bailiff and Head of the Military and Hospitaller Order of St Lazarus of Jerusalem, he once headed a British delegation to a cultural forum in Budapest, he's written on law and morality, and the travels and mission of Pope John Paul II. He gives sleeping as one of his recreations. But there's no reference to BSkyB.


Writing last weekend, Lord Hanson warned of 'overkill in shareholder activism'. Hanson said: 'Executives run companies, non-executives advise, and we should not confuse the two. Few non-executives are thoroughly schooled in the company's activities and therefore in a position to smell potential problems. For a paltry fee, they bring an established name to the party which is not worth the effort to them of spending that much time on the job.'


He could have been referring to St John. If ever there was anyone qualified to be a decoration on a Christmas tree it is him. While his name added lustre to the BSkyB board, what he actually did beyond wake up and attend meetings is not known. Certainly, when Tony Ball resigned and the quest for a new chief executive became public, his seeming inability to anticipate difficulties landed him in trouble with the institutions.


The National Association of Pension Funds turned on the Clothworkers Exhibitioner of 1946 and 1947 (yes, he lists it), President of the Cambridge Union of 1950 and Secretary of the Oxford Union of 1952 and said: 'He must...bear some responsibility for the group becoming engaged in a very public, and in some cases antagonistic, debate on the identity of the future chief executive.'

St John, said the NAPF, was 'not appropriate' as the senior non-executive director heading the search because he was 'not considered independent', having been on the board for 12 years.


Statements like this are making City heads spin. Even ignoring the fact that under best-practice rules, St John should not have been there at all - 10 years is regarded as the maximum tenure - what did the NAPF seriously expect? Does Rupert want people on his board who are truly independent? Do they, when they sit and decide on where to park pensioners' cash? Of course they don't.


There's a feeling of closing the door after the horse has bolted. Every year, NAPF and its members would receive the BSkyB annual report and every year they'd turn up at meetings and choose to do nothing about St John. This year, because of the row about James, they are making noises about having his head and Rupert's.


British corporate life is littered with St Johns. He's the classic salaried politician turned obtainer of honours, quango and board seats and sinecures.

At Westminster, he's chiefly remembered for being able to jest with Mrs Thatcher in a camp courtier fashion - calling her 'the blessed one' until she lost patience with his 'wet' politics and dropped him - and for being instrumental in setting up the Select Committee system of Parliamentary scrutiny. The latter is genuinely creditworthy although the level of probing is often shallow and politically biased - not unadjacent, you imagine, to the depth of interviewing of young James.


He went on to enjoy a life of splendour, residing in the Master's Lodge at Emmanuel, Cambridge, and chairing the Royal Fine Art Commission. Based in the Commission's offices in St James's Square, he sallied forth to the Lords or to lunch at one of his clubs. Somehow, he survived a savage independent review of the Commission in 1996 and was appointed for two more years.


Students recall the pictures of him with members of the Royal Family that adorned his rooms at Cambridge. Whenever there was a Buckingham Palace crisis, up popped the obsequious St John, guaranteed to take the deferential line in radio and TV discussions. He appeared in Hello! magazine, complete with monogrammed slippers. And he joined the board of BSkyB.


In the row over the appointment of James, he wrote to an investors' group declining a pre-arranged meeting. The letter was in purple ink and on House of Lords notepaper. The angry institutions have only themselves to blame: not St John for wanting the cash and not Murdoch for hiring a bauble.



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