FDs need the X-factor for CEO role

The move was audacious and one, critics claim, Thiam made with scant concern for the views of shareholders, advisers, the rest of the board or other senior executives. The deal would have been one of the biggest foreign takeovers ever attempted by a British company.

You might have imagined that Thiam’s political past life would have laid the foundations for an expert approach to communication and, more importantly, persuasion in selling the AIA deal to shareholders – precisely the kind of skill the CEO is paid to discharge. You can’t teach it and, in some cases, it is the quality FDs are accused of missing.

Influential shareholder groups – including fund management firm Schroders, which holds a one percent stake in the Pru – have called for Thiam and his chairman Harvey McGrath to take the ultimate responsibility for the failed bid, forcing the lofty chief executive to make a public apology at the company’s annual general meeting for his “strained relationship” with shareholders.

“We understood at the start that there was a risk that we might not achieve our goal, but we believed the prize was worth the risk,” Thiam said at his first AGM as head of the insurer.

While the prize would have undoubtedly been an attractive one, it was a risky strategy and not one which many would have expected from the man from accounts. The cost of the aborted takeover included a £153m break fee for pulling out of the deal and the debacle has pushed the Prudential’s share price downwards from the 600p it boasted in April to the low 500s.

“Before AIA, people would have described Thiam as an excellent CEO. Now he’ll be lucky to keep his job,” says Chris Gaunt of headhunters Heidrick & Struggles.

Gaunt believes Thiam should be used to taking the rap for company problems. “The FD is a largely thankless position,” he explains. “They get all the blame when something goes wrong. If a company suffers, it is rarely the CEO who loses his job. On the other hand, FDs are rarely praised when something goes right.