It’s rare for the appointment of a new finance director to pique MT’s interest. It’s nothing personal. It can just be a little, well, boring. There are exceptions, however. FTSE 100 retailer Sports Direct announced today that its 18 month wait for a finance chief is over, with the appointment of Matt Pearson.
A week may be a long time in politics, but 18 months is a very long time in business. A year and a half ago Tesco was still riding high, coalitions were all the rage and no one knew exactly what a 'Grexit' was (one of the last couple of years' more excellent words). For a major public company, albeit one majority owned by its founder and ‘executive deputy chairman’ Mike Ashley, it’s extraordinary to go for such a long time without a CFO.
Why, you may ask? The fact the Earth didn’t open up and swallow Sports Direct whole because it didn’t have a finance chief is in a sense proof that a company doesn’t actually need one to function, operationally at least. Indeed, Pearson was already the top finance guy at the firm anyway, having joined in 2007 as an accountant before becoming group financial controller.
Mike Ashley didn’t appoint him just because he was lonely on the board, however. He did it because investors expect and good corporate governance demands that finance has a voice at the top table. It’s a voice of caution, to counsel against reckless risks and to protect the bottom line.
Bosses don’t have to listen to CFOs any more than group financial controllers, but the fact that one is in place reassures shareholders that the firm isn’t playing fast and loose with their investments.
Hedge fund boss Crispin Odey, whose Odey Asset Management is Sports Direct’s third largest shareholder, publicly criticised the lack of a finance chief in March, saying it ‘puts too much power into one person’s hands’. Whether he or others will be assuaged by this appointment remains to be seen.
It is of note that Pearson is only an acting chief. It likely means that Ashley wanted to placate his detractors, but they may not be satisfied for long if Sports Direct fails to make a permanent appointment. Somewhat inauspiciously, shares in Sports Direct fell 1.2% this morning to 676p, roughly in line with the FTSE 100.