The London Stock Exchange would like everyone to know it will choose a successor to the chief executive, Xavier Rolet, in a smooth and orderly manner and, since the boss’s last lap of the track could extend until the end of next year, there will be “many opportunities” to celebrate his “remarkable achievements”. It’s nice to know there’ll be a knees-up, but it would be more useful to hear why Rolet has chosen to go.
Neither the company nor the man himself bothered to explain. We’re just supposed to assume that, with a decade or so on the clock, nothing could be more natural than quitting at the age of only 57. But, if a decade-and-out is somehow an unwritten rule for FTSE bosses, nobody has told Simon Wolfson (16 years at Next), Willie Walsh (12 at British Airways and parent IAG), let alone Sir Martin Sorrell (31 at WPP).
One assumes Rolet has something up his sleeve since he was prepared to go to make way for his counterpart if the merger with Deutsche Börse had happened (a move into French politics was a rumour). But he’ll be a loss for the LSE. As chairman Donald Brydon says, the record is impressive. The share price has improved from 500p to £39 and Rolet’s expansionary ambition has paid off in spades.
A decade ago, the LSE was concentrated in equities and being perpetually sized up for takeover. These days it is a £14bn company also running indices, clearing over-the-counter derivatives and in control of operations that extend well beyond London and Europe. Almost nobody mourns the collapse of the Deutsche deal. The LSE’s share price has improved by almost 30% since March, shouting confidence in the group’s ability to withstand whatever Brexit brings.
On the Brexit front, Rolet’s extended goodbye thankfully allows time for him to continue as the City’s most effective speaker on two critical points. First, that a transitional deal is desperately needed – and soon. Second, that the EU would be silly to attempt to dismantle London’s dominance in clearing euro-denominated trades: the disruption would create unnecessary financial risks for everybody. The latter argument sounds so much better from a Frenchman – Rolet should keep banging the drum.
The BP chairman is great? Try telling investors
Bob Dudley, chief executive of BP, is being generous to his outgoing chairman when he says the company’s comeback after the Deepwater Horizon disaster “would not have been possible without the strong leadership and steadfast support of Carl-Henric and the board”.
Carl-Henric Svanberg was chiefly notable during the 2010 crisis for being invisible. Strong leadership, it wasn’t – at least not in the eyes of the outside world, which was the constituency that mattered. Dudley’s predecessor, Tony Hayward, became the sole public face of BP and, plainly stressed, made his own position impossible with his crass comment about wanting “my life back” – 11 people had died in the explosion. Shareholders were openly critical of Svanberg’s low profile.
Yes, it’s true that BP has “come back” in the sense that it was able to pay the enormous clean-up bill and fines. But the other thing that came roaring back was executives’ enormous pay packets, to the point where 60% of shareholders in 2016 voted against Dudley’s £14m pay package in a year in which BP reported record losses, cut thousands of jobs and froze employees’ pay.
At an establishment company such as BP, it takes some doing to stir 60% of normally supine investors to scream “too greedy”. But, on Svanberg’s watch, it happened. Maybe he’s brilliant behind the scenes but next May’s annual meeting, the actual moment of his retirement, probably won’t be a shareholder love-in.
Unilever’s vision is to boost profit margins
It’s a good thing that Unilever isn’t in the short-termist game of managing its business for quarterly results. The last quarter was a shocker. Or, rather, the sales figure was so shocking to the City that the share price fell 5.5%.
Could that prompt Kraft Heinz to return with another bid? If some in the City are still dreaming about a repeat of February’s drama, they are surely destined to be disappointed. Unilever’s share price has still risen from £33 to £43 since the approach from US cheese-and-ketchup merchant, which is a useful deterrent against opportunistic debt-fuelled bidders.
More to the point, one bad number – underlying quarterly sales growth of 2.6% instead of the 3.9% predicted by the City – really doesn’t mean much. Amid the whirl of post-Kraft activity, only one target really counts. Can Unilever get profit margins to 20% by 2020? The company remains confident, as it would be, but the earliest and sensible guess can be made by outsiders is 2019. By that time, Kraft’s gaze will have turned elsewhere – and may have done so already.
In the meantime, the interesting short-term news will be the outcome of Unilever’s review of its dual-headed corporate structure, which is due by Christmas, just in time for the next Brexit showdown. A purely Dutch HQ would cause a storm.
