UK: THE OLD MEN ON THE BOARD.

UK: THE OLD MEN ON THE BOARD. - British business is not short of ageing leaders, but do their many years of experience bring added value to companies or is there a sell-by-date that they should not exceed?

by Martin Vander Weyer.
Last Updated: 31 Aug 2010

British business is not short of ageing leaders, but do their many years of experience bring added value to companies or is there a sell-by-date that they should not exceed?

'Business is like bull-fighting,' former British Rail chairman Sir Peter Parker once remarked. 'You can't be amateur and you can't be old.' The reasoning behind the last part of that proposition is easy enough to identify. You can't be old because today's corporate world demands ever-increasing flexibility of mind to cope with the pace of technological progress. It demands the physical fitness of the long-distance jogger to cope with 24-hour pressure and constant travel.

In consumer-related businesses it demands an acute awareness of the tastes and habits of younger generations, whose spending power offers the key to success or failure. It demands mental faculties in perfect working order: Parker has also spoken of 'the Lear syndrome', invoking the Shakespearian king tormented by loss of judgment as age took its toll.

Does all this ring true, or is it a myth put about by middle-aged executives anxious that their senior colleagues should make way for them? Are Postel and other investment institutions right to oppose, on principle, the re-election of board members over 70?

Is the modern prejudice of ageism just as wasteful in terms of talent ignored as male chauvinism was in an earlier era? Or is the answer more subtle: that youth and age each have their contribution to make, and that the best-run companies are those that make effective use of a combination of the two?

There are more than 230 directors of British public companies (including, incidentally, Sir Peter Parker) who have passed their seventieth birthdays, and a couple of dozen, often in family businesses, in their eighties. Undoubtedly, there are examples to be cited of companies that have suffered from refusal on the part of their ageing leaders to acknowledge that the world has changed: Tesco in the 1970s, under the autocratic influence of its founder Sir Jack Cohen (who died in 1979 aged 81) was a text-book case - sticking doggedly to its cheap, old-fashioned formula while Sainsbury's and others galloped ahead in quality and presentation.

But there are far more examples of the beneficial influence of septuagenarian bosses and some of careers that have flourished beyond all expectation well after normal retirement age. Sir Ian MacGregor was 67 when he returned to Britain to revolutionise British Steel, almost 71 when he moved on to the ferociously demanding task of shaking up the National Coal Board.

At 78, he was eased out of the chairmanship of the Scottish printers, Hunterprint, on the grounds that he was too old: he promptly sued for wrongful dismissal. Keeping up a trans-Atlantic business schedule well into his early eighties, his secret formula is an ability to sleep well on aeroplanes and 'a low threshold of concern'. 'At my age', he says, 'some men chase girls, some play golf, some just become vegetables. I do business.' Perhaps ironically, it is the obituaries columns of the daily newspapers that provide the best evidence of fulfilling business careers extended into old age: recent entries have included David Fildes (father of the financial columnist Christopher) who was chairman of Barlows, a Manchester-based cotton company until he was 85; Jack Gleeson, chief executive of his family construction firm until he was 78; and the banker George Preston, called from retirement at 75 to help rescue Johnson Matthey.

More famously, two peers who died this year provide vivid evidence of unfading energy and acumen to the end of their lives. The first was Lord Sharp of Grimsdyke, who had enjoyed an unspectacular career in the civil service and industry until, at 63, he was appointed in 1980 to head Cable and Wireless in the run-up to its privatisation.

As the parent of Mercury Communications, C and W emerged over the following decade as one of the most progressive companies in the world telecommunications industry. Eric Sharp himself was tireless: in his mid-seventies, after leaving C and W, he joined the board of Carlton Communications, whose chairman, Michael Green, 30 years his junior, provides a glowing testimony.

When Sharp died suddenly in May (shortly after returning from his second trip to China within a month), Green described him as 'Just extraordinary in his grasp of business problems - the best director we ever had.'

The theatrical promoter Lord (Bernard) Delfont died in July aged 84. Delfont formed First Leisure Corporation - a highly successful venture based on the entertainment preferences of the younger generation - only 10 years ago. Having been told that he was too old to continue as a director of Thorn EMI, he led its leisure division first into the hands of Trust House Forte and then into a management buy-out. At 79, declaring that he still felt no more than 35, he stepped down from the chair, only to return seven months later when his successor failed to fit in. After four more years he finally retired to the position of president (the difference being that he ceased going to the office on Mondays) and handed over to 74-year-old Lord Rayne.

These are all, needless to say, unusually vigorous and highly motivated men. So are a number of other venerable members of the House of Lords: Lord Hanson and Lord White, whose 30-year partnership shows no signs of flagging; King, who was 63 when he took on the ailing British Airways in 1981, and remains formidable at 76; Forte, who has maintained a presidential role in his hotel and catering business well into his eighties; and Weinstock, whose reluctance to retire has been in and out of the news since his seventieth birthday in July.

While doctors may say that it is risky for anyone to go on into old age exposing him or herself to constant executive stress, the tycoons themselves are more likely to argue (as President of the Board of Trade Michael Heseltine did after his own recent heart attack) that the adrenalin of a busy life is so vital to them that it would be far more dangerous to stop, and that new challenges and changing horizons help to keep them young. According to one doctor, retirement for high achievers can represent not liberation but a depressing vacuum, 'almost a sense of bereavement'.

Such problems arise most acutely in cases where the director concerned is the founder and driving force of his company, and has dedicated his energies to it for several decades. In the more institutionalised, pyramid-shaped management structures of established public companies such as Shell, ICI or the high-street banks, chairmen are more likely to move on promptly at 60, with the prospect of other chairmanships or public appointments to keep them from falling idle: Sir Anthony Tuke, for example, moved from Barclays to RTZ to the Savoy Group; Sir Robert Haslam from the deputy chairmanship of ICl to British Steel and then (following in MacGregor's footsteps) to British Coal.

At middle levels of management, however, idleness may be a welcome alternative to extended years of office life. Those who never reached the boardroom are often happy to make way for younger men as soon as pensionable age is in sight, and if that age can be brought forward into their fifties, so much the better. Early retirement is now often made available to middle managers as a painless means of cutting staff numbers, and made respectable by the suggestion that those managers could not have been expected to keep up with the accelerating pace of market change - a sad irony, since advances in healthcare (hormone replacement for women, for example) are at the same time helping to extend the potential for active lives.

'The greatest ambition of people in this country is not to work,' according to Sir Ian MacGregor, himself the product of a Scots Presbyterian upbringing and a 40-year industrial career in the United States. For those who had the stamina and enthusiasm to build major businesses in the first place and prefer to keep working for as long as they have the physical capacity to do so, it seems curious that anyone should argue for stopping them. Older, well-seasoned middle managers can also sometimes have unique value: one of Sir Brian Pearce's policies for the revival of Midland Bank in the early 1990s was to invite experienced but early retired branch managers to come back and show the younger men how the job should really be done.

The value of older executives lies in their wisdom, gravitas and breadth of acquaintance, but most especially in the simple advantage of length of experience. Unlike younger colleagues, they have probably seen most business problems, including stockmarket and property crashes, more than once before. They may no longer be sprinters, but if they have chosen to continue working they will know how to pace themselves and probably still have as much stamina as they had in middle age.

Of the arguments against them, only the one about coping with the pace of change really bears examination. This says that the elderly are constitutionally less capable of adapting to new circumstances, whether in technology or public taste - and that the likes of Lord Sharp are rare exceptions. Corporate governance guru Sir Adrian Cadbury recognises some truth in this thesis: he says that a distinction can be made between business leaders and, for example, judges, who are generally thought able to continue working unimpaired well into their seventies. 'Markets change much faster than administrative or judicial systems. In business, change is a constant factor; in other walks of life it is a threat.'

Cadbury says that there should be general principles about the retirement of directors, but no hard and fast rules. He has suggested that annual reports should always carry up-to-date photographs, so that physical ageing can be observed from year to year. He believes that there should be more ample disclosure of information about directors, so that shareholders may know how each director came to join the board and what contribution he or she has to make. Is it really productive, as sometimes happens, to allow former chief executives or chairmen to remain on their boards for five or 10 years after retirement from executive duties, for no reason other than honour and tradition?

'The important question is not whether this man or woman is over 70,' says Cadbury, 'but whether we need someone on the board with that particular background and skill. What matters most is the composition of the board as a whole, whether it is a coherent team to tackle the problems of the moment. People always tend to think in terms of individual names, but the really important test is that of collective capability.'

The question of boardroom teamwork raises the most contentious issue in relation to elderly chieftains: succession, or lack of it. A case in point has been Lord Weinstock, who has been managing director of GEC for more than 30 years, ever since he engineered its reverse takeover by his father-in-law's company, Radio and Allied Holdings. Weinstock is still a commanding figure, but he long ago lost his late 1960s reputation as Britain's most dynamic industrialist. Pressure on him to retire is shrugged off with characteristic disregard for conventional opinion.

'Live as if you are immortal', is one of his favourite quotations. He pointed out that he had never suggested that he would retire at 70, 'any more than I said anything would happen at 50. My position has always been that when someone comes along who could do better, I will move over.'

No one has dared to suggest any sign of age-related deterioration in Weinstock's faculties - indeed, what is most maddening to his critics is his absolute consistency over the past 15 years, particularly in the cautiousness of his investment policy. The cause for increasing concern, however, has been his posture of waiting for someone to 'come along' as his natural successor. His son Simon has long been a candidate and there are now at least three other GEC divisional directors in the frame, but the absence of an heir remains a deep frustration to institutional shareholders.

Lord Hanson used to face similar sniping as his own seventieth came into view. A slip of the tongue about dates, or a trip on the steps of the AGM podium on Lord White's part, provoked obsessive press scrutiny as to whether either or both of them were still up to the job. But the emergence of Derek Bonham as the group's chief executive, clearly in line to take over, has largely assuaged their critics, while the two peers themselves show no immediate signs of retiring. 'What I do is exciting,' White said in 1992, 'There was a time when 65 was old, but not today. With all our knowledge we can keep our minds and bodies working well into the eighties.'

The 76-year-old Tiny Rowland gives the impression that he intends to do just that. But he, by contrast, has yet to offer investors any strong reassurance on the question of succession. Instead, he continues to keep the outside world guessing as to whether he is prepared to acknowledge the German investor Dieter Bock as the real heir to the Lonrho empire - and institutions generally continue to shun its shares as a result.

There is elementary psychology in the fact that strong, charismatic leaders often find it difficult to groom their own successors: after all, look what happened to Margaret Thatcher.

Lord King, long-serving chairman of both British Airways and FKI-Babcock, acknowledges the problems this syndrome can create.

'Retiring just isn't a good idea. I mean, what would I do, sit on the QEII somewhere? No, you've got to stay in there. But not at the cost of the company. You musn't be there so long that the rising talent in the company can't see their own future at the top. If that happens, they'll get head-hunted and go elsewhere. You should prepare the succession and you should be available for as long as you're wanted, but when you're not wanted any more you should go. It's up to the board to tell you when its time, that's what the non-execs are there for, if they're any good. There's always new, creative things to be done elsewhere, so don't block the ladder.' When Lord Delfont announced in 1991 that his 48-year-old nephew Michael Grade, chief executive of Channel 4, was to join him on the board of First Leisure, he observed that 'age and youth is a good mixture in running businesses'. That may not seem the most original of thoughts, but it offers a large part of the answer as to how companies can derive the most benefit from the presence of elderly directors.

One of the most distinctive, and perhaps the best, of all examples of a well-structured combination of the two elements is not in industry, but in the City, in the pre-eminent investment banking house of SG Warburg.

Sir Siegmund Warburg, the bank's founder, passed on its chairmanship when he was 60, but remained in constant touch with its activities (often by telephone from his Swiss villa) until his death 20 years later. Together with his founding partner Henry Grunfeld, he developed the concept of 'uncles' - an older generation overseeing and advising on the deals executed by younger men, as well as acting as ambassadors and long-term strategic thinkers for the firm.

One of those younger men was Sir David Scholey, now chairman, who has been a director since 1967, ensuring seamless succession. Grunfeld is 90, but he and his 86-year-old fellow 'uncle', the former civil servant Lord Roll, remain astonishingly active.

Held in high esteem throughout the financial world, they hold the rare advantage that almost nothing can happen in it which they have not seen many times before.

The moral of the story is, as 82-year-old industrialist Sir Ian Morrow (still a non-executive director of MAI) has said: 'Age shouldn't be considered an absolute barrier any more than youth should be considered an absolute virtue.' The old have a special value, in business as in other walks of life: when times are difficult, the wisdom of those who have been through it all before may be invaluable; when markets boom, the innate caution of age may be an essential balance to the hotheadedness of youth.

Elderly business leaders work best in combination with younger colleagues; they should always plan an orderly succession, and they should recognise when to let go gracefully. But to hustle them out at 65 or 70, when they still have so much more to offer, is to waste an extraordinary reservoir of talent.

LORD WEINSTOCK: 'THE BEST MAN FOR THE JOB'

Lord Weinstock has become the latest in what is a long list of directors staying in their positions for years after their contemporaries have traded the board room for the golf course.

In late July, he turned 70 and became, under GEC's current rules, too old to stay on as managing director. Undeterred by this, the rules were changed and Weinstock was duly re-elected for another two years at GEC's annual meeting on 2 September.

Unsurprisingly Weinstock's recent activities have been the subject of considerable comment. What is more surprising, perhaps, is the number of voices which have lent him their support.

The chairman, Lord Prior's statement came early in July. 'Lord Weinstock reaches the age of 70 in the current year. He has agreed to the board's request that he should continue as managing director for the next two years.'

A few days later the Sunday Times's Ivan Fallon wrote, concluding: 'With his strategy three quarters complete, the final years of his reign could be among the best.' The Observer's Michael Tate also put himself behind Weinstock with an article that concluded: 'ln other words, he remains the best for the job.'

Weinstock, a week later seemed happy to concur: 'My position has alway been that when someone comes along who could do better, I will move over.' He continued: 'The question has always been to find someone who is suitable.'

Rumblings were heard among the fund managers, but GEC had more or less quashed these by mid August. Nonetheless, Stephen Anderson of Murray Johnson said: 'We met Lord Prior, but have written letting him know we are very unhappy. I understand the board did not discuss the succession,' while another fund manager had said earlier that it was 'time for Weinstock to plant his onions'.

By the AGM on 2 September, any serious opposition had been effectively dealt with and Weinstock was re-elected by a show of hands. Of the three hundred shareholders present at the meeting only two raised their hands in the vote against his continuation and no one spoke out publicly against the motion, including the institutional investors who had earlier expressed serious misgivings.

BRITAIN'S OLDEST EXECUTIVE DIRECTORS OF PLCS

Name Age Position Company

1. Isidore Kerman 89 Bristol Scotts

2. George Szpiro 88 Chairman Wintrust

3. Edward Loades 84 President Abbey Panels Invest

4. Frank Jackson 84 Chairman Jackson Group

5. Sir John Woolf 81 Chairman/MD British + American Film

6. William Johnston 81 Johnston Group

7. Harold Cantor 80 Chairman Cantors

8. Peter Kershaw 79 Chairman Jt/MD Joseph Holt

9. Sir Edward Howard 78 Chairman Oceana Consolidated

10.Frank Sinclair 78 Mountview Estates

AND 20 MORE GRAND OLD MEN OF INDUSTRY

Name Age Position Company

Roland Rowland 76 Joint MD Lonrho

Lord Rayne 76 Non-exec Ch First Leisure Corp

Lord Carrington 75 Non-exec Christies International

Lord Chalfont 74 Exec Ch VSEL

Sir Frank Rogers 74 Non-exec DpCh The Telegraph

Sir Leslie Porter 74 Non-exec Helene

Sir Anthony Tuke 73 Non-exec Ch Savoy Hotel

Ronald Hooker 73 Non-exec Ch Warner Howard

John Young 73 Ch/CE Young + Co's Brewery

Lord Hanson 72 Exec Ch Hanson

Sir Tom Cowie 71 Non-exec European Motor Hold

Sir Leslie Fletcher 71 Non-exec Ch The Rank Organisation

Sir Lewis Robertson 71 Non-exec Ch Stakis

Jack Grant 71 Exec Ch Worthington Group

Sir Robert Clark 70 Non-exec Ch Mirror Group

Sir Alex Jarratt 70 Non-exec Smiths Industries

Sir Raymond Lygo 70 Non-exec Ch Rutland Trust

Sir John Harvey-Jones 70 Non-exec Grand Metropolitan

Sir William Barlow 70 Non-exec Vodafone Group

Lord Weinstock 70 MD GEC

Source: Corporate information Database of Hemmington Scott, publishers of

The Arthur Andersen Corporate Register.

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