Easy targets

“The FD is seen as the only person you can rely on to have integrity,” says one of London’s top executive headhunters, who has worked with several FTSE-100 FDs and speaks on condition of anonymity. “For that reason, the FD community is one of the only places where integrity and reputation is absolutely everything.”

Companies have wasted no time in capitalising on that to protect the CEO and chairman from paying for strategy errors with their jobs and professional dignities. Another leading headhunter for one of Europe's top executive search companies, who also prefers to speak off-record, agrees. “FDs are expected to speak up about concerns on strategy, but when they do, they find themselves the lone voice of dissent," the headhunter says. “Someone like [former Mitchells & Butlers FD] Karim Naffah, for example, has a lot of integrity, but leaving in the way he did, an FD is unlikely to go to another public firm." Naffah resigned from the pubs operator in January after reporting huge losses caused by a hedge that had been put in place for a deal that never came off. Many think he acted on bad advice and shouldn't have taken the blame alone.

But CEO Tim Clarke allegedly had his offer to quit refused by the board, leaving Naffah with no option.

This goes some way to explaining why most FDs who have left FTSE-350 companies in publicly acrimonious circumstances over the past decade have not resurfaced. Even top FTSE-100 FDs are not always prepared to manage a media onslaught and most have simply disappeared after a reputational beating.

Name’s mud
"Mud sticks," says one four-times FTSE-350 FD ­ who also wanted to remain anonymous. “Look at Ric Piper,” this former FD says. Piper had been FD of WS Atkins and was sacked from his new job as FD of Trinity Mirror days before he was due to start, following news of a profits warning issued by Atkins on the back of a failed systems integration project. “They [Trinity Mirror] said, ‘How can we take him on now?’" the four-times FD says.

“They didn't want someone who was tarnished. If that had been done quietly it would not have harmed his career, but he hasn't had another FD job since, and he was a good FD." Piper is now an adviser to AIM-listed growth companies and privately-owned outfits. Whether that is entirely by choice or in part a result of “mud sticking” is hard to say since Piper declined to be interviewed ­ but it's clear that the latter's effect can be devastating to previously well-regarded FDs.

The headhunters, advisers, corporate lawyers and ex-FDs we spoke to all agreed that once an FD has exited a FTSE-100 company having been dismissed, or resigned at the request of the company ­ and it has been discussed in the press ­ it is almost impossible to return to the listed world in the same capacity. After spending time out of public consciousness, some FDs [can] move into roles heading up the finance functions of privately-owned companies, family-run businesses, private equity-backed outfits or SMEs that are otherwise out of the glare of the publicly-quoted world and shareholder pressures.

But few ascend back to FTSE companies: Steve Hare, CFO for Invensys, is one rare example of someone who succeeded after he was forced to step down. Hare resigned from his role as FD of Marconi in 2002 following the controversial debt-equity swap that, while creating a rash of blisteringly negative press coverage at a time when the shares were tanking, prevented the company sinking altogether. Becoming self-employed for a year by co-founding a small business consultancy, he then joined FTSE-250 company Spectris in 2004 and, in July 2006, was appointed CFO of then-troubled Invensys, once a FTSE-100 star, but at that point languishing in the mid-caps. Under his financial tutelage, Invensys re-joined the FTSE-100 in June.

Hare declined to speak to Financial Director but his was the only case people we spoke to could think of when asked to identify FTSE FDs that had survived an acrimonious FTSE departure and the ensuring negative media attention. “Hare saved Marconi by negotiating very aggressively with the banks and the company wouldn’t be here today without him,” a top London FD headhunter says. “But because of that the banks didn’t want to work with him anymore and that made him untouchable. So he hid at Spectris for a couple of years and made sure he hit all his targets and kept his nose clean. Invensys was a basket case when he turned up - which gave him his opportunity.