Tesco commercial director Kevin Grace has been asked to step aside as a part of the investigation begun two weeks ago into the overstating of the supermarket's first-half profit by £250m, according to the FT this morning.
His departure brings to five the total number of Tesco Grands Fromages who have been told to stay at home since the profits black hole appeared over the event horizon a fortnight ago. The others are: Chris Bush, UK managing director, Carl Rogberg, UK finance director, John Scouler, food commercial director and sourcing head Matt Simister.
Crikey. Every new boss wants to bring in their own people of course, but new CEO ‘Drastic’ Dave Lewis must be thinking that this wasn’t quite the way he’d imagined doing so.
Coming on top of the unfortunate delivery of a £30m Gulfstream jet and harsh criticism from Warren Buffet, the world’s most successful investor, Lewis’s blood pressure is under assault from all sides. Talk about a baptism of fire.
But arguably the one who is most likely to be really feeling the heat is chairman Richard Broadbent. Many investors are now more or less openly wondering whether Broadbent should stay or go. The appointment of two new retail veteran NEDs may keep the baying pack off his case for a bit longer, but if the crisis cannot be defused fairly quickly then his tenure looks much less certain.
Of course the business of despatching the chairman of any company is a tricky one, if anything even more fraught than delivering the coup de grace to an underperforming CEO. The unenviable job of wielding the knife falls, according to the code of corporate governance, to the Senior Independent Director - in Tesco’s case Lewis’s old Unilever colleague Patrick Cescau.
But that is very much a last resort - in a crisis the chairman should, all other things being equal, stick around at least long enough to sort out the mess. That way a more measured decision about his or her future can then be made.
Whether Broadbent can stick it out long enough for that due process to play out or not remains to be seen. The gravitational pull of £250m should not be underestimated…