Higgs, the former chairman of investment bank SG Warburg, whose report on corporate governance changed the way many UK companies use non-executive directors, passed away suddenly on Monday. The news was announced by Alliance and Leicester, the bank he has chaired since 2006. ‘It was with shock and sadness that we learned of Derek's sudden and unexpected death and our thoughts are with his family,’ the bank said. ‘Derek made an outstanding contribution to British business.’
Higgs is a genuine City grandee, having spent most of his working life in or around the Square Mile. After graduating from Bristol University, the Solihull-born Higgs started his career at Barings, but decided that the bank was a little too blue-blooded for his tastes and moved on to Warburg in 1972. He remained there for 24 years, rising to chairman and only leaving when it was sold to Swiss Banking Corporation (which would later become UBS) in 1996. ‘If you were going to take any 25-year period to be working in the City during the course of the last century, then the period between about 1970 and 1995 would have been it,' Higgs told MT in 2002. 'It was an amazing period of opportunity and change. He went on to spend four years at Prudential, before taking directorships at British Land, Allied Irish and Egg.
But his most lasting legacy to UK plc will probably be his report into corporate governance, which was commissioned by the government after the Enron and WorldCom scandals in the US. The idea was to shake up British boardrooms, to help directors stop this kind of thing happening in the future. When MT spoke to him, just after he started work, he accepted that it wasn’t an easy task. 'It is certainly a very difficult subject,' he told us. 'Because it is really about changing the way people behave, not just changing a rulebook.'
When Higgs finally produced his review the following year (‘The Role and Effectiveness of Non-executive Directors’), it met with a hostile reception. This was partly because his recommendations – which included strengthening the role of independent non-execs (who he thought should form the majority of every board), and separating the chairman and chief executive roles – were seen by many as unworkable, and partly because it was seen as an attack on the old boys’ club in the City.
But although Higgs might have ruffled a few feathers at the time (British Land was one of the companies that combined the chairman and CEO roles), he clearly had the last laugh. His approach has now become the norm in British boardrooms – as can be seen by the recent row over Sir Stuart Rose’s elevation to executive chairman. Not a bad legacy to have – although as MT’s Matthew Lynn said at the time: ‘If the world was composed only of Higgses, his review would probably not be necessary’...
Read MT's full 2002 interview with the late Sir Derek here.