AdSlot 1 (Leaderboard)

Cover story – Counting the beancounters

The accountancy qualification has long been regarded as essential forst that, with more than three-quarters of FTSE-100 FDs being trained accountants, the qualification still counts for something. aspiring financial directors. No self-respecting FD would ever expect to make it onto the board of a FTSE-100 company without having a set of letters after their name to prove that they know how many beans make five – and how to make it look like six (or four, if you prefer). But that’s no longer true.

Financial Director’s first ‘beancounters survey’ looks at two aspects of the FD’s changing role.

Firstly, we examined the extent to which FTSE-100 FDs are qualified accountants.

Increasingly, the FD’s remit is seen to be growing to encompass more broadly based business strategy issues, ‘partnering’ other board members in a way that – arguably – makes an accountancy qualification, as such, unnecessary.

Secondly, if it is true that the FD’s role now equips him for a job that involves deciding what beans to count, rather than merely how to count them, then we thought it would be useful to see how many former FDs are now chief executives in the FTSE-100. (We also looked at FTSE chairmen, but the nature of that role varies between the ‘chairman and chief executive’ head honcho, as at British Steel, to the ‘professional non-exec’.)

Our findings show that just over three-quarters of FTSE-100 FDs have an accountancy qualification. The ICAEW and the ICAS in Scotland are the dominant institutes, with 55 FDs calling themselves chartered accountants.

Fifteen FDs came through the CIMA management accountancy route, while just six are ACCA certifieds (two FDs – Richard Lapthorne at British Aerospace and Kenneth Hydon at Vodafone – are members of both institutes, so that’s why our FTSE-100 table adds up to 102). Two CIPFA public sector accountants feature, both at privatised utilities. There are also two US-qualified accounts. Four companies have no named financial director.

There is a certain predictability about the explanations for these figures.

Senior-ranking chartered accountants will talk about the fantastic training and discipline of the institute programme; certifieds will gladly explain that they are in “the next generation” of FDs, because theirs is a younger membership that has yet to “trickle up” into the older, more experienced echelons of the FTSE-100; CIMAs will talk about being “close to the business” and point to the salary surveys that show how their qualification is now hard on the heels of the chartereds.

Of the 17 FDs who do not appear to be qualified accountants, some may have qualified in the past but have not maintained their membership. Charles Miller Smith, for example, current chief exec of ICI and former FD of Unilever, describes himself as “a lapsed ACCA”. But is an accountancy qualification of any sort really necessary to be a FTSE-100 FD?

Roger Mann, the FD of Siebe who was interviewed by us in our April issue, is quite emphatic: he says: “It’s imperative to have an accountancy qualification to survive in the current financial world.” Mann even emphasises the importance of the basic, solid number-crunching skills: “The FD should have a good knowledge of UK accounting standards and international standards and US GAAP,” he says.

Simon Duffy, who, as FD at music group EMI, has an MBA but is not an accountant, could not disagree more. He says an accountancy qualification is “not important at all.” It’s all down to the structure of the finance department, he adds: “The idea is to employ accountants.”

So, no agreement there, then. The only way to resolve this one, presumably, is to answer three questions: What kind of FD do you want to be? What kind of FD can your finance department currently support? What kind of FD does your company need? Other than that, we’ll let the facts speak for themselves.

In the chief executive stakes, about one-in-six chief execs boast an accountancy qualification or have been FDs in the past – either at their current company (Compass Group’s Francis Mackay, Keith Oates at Marks & Spencer) or elsewhere. (By the way, we have to admit to feeling a certain amount of sympathy for Safeway’s FD, Simon Laffin. Both his chief exec (Colin Smith) and his deputy chairman (David Webster) have been FD of the company – which must put a certain amount of “We know how to do your job” pressure on Laffin!)

Predictably, perhaps, many came up through the engineering route, but chief execs do not lay claim to any particular formal qualification. It’s fair to ask whether the skills employed by an FD equip him for the chief executive’s job. Rodney Westhead, the former FD and current chief executive of Ricardo Group, offers his own insight into this issue in this month’s interview (see page 18).

Other chief execs, such as Charles Allen at Granada Group, will have done some accountancy work in their dim and distant past, but moved on elsewhere within the business world rather than ascend to the rank of FD.

At the highest level in the boardroom, the chairman plays a vital role.

Woolwich plc chairman Sir Brian Jenkins says that the chief exec may run the company, but the board runs the chief exec. Sir Brian is, of course, a former senior partner of Coopers & Lybrand, and a one-time president of the ICAEW. In a similar vein, BTR’s Elwyn Eilledge recently joined the corporate world from Ernst & Young.

Other beancounting chairmen include Reed International’s Nigel Stapleton, British Steel’s Sir Brian Moffat and GKN’s Sir David Lees, all of whom were FDs at the companies they now chair. Sir Ian Prosser, who is the chairman and chief executive of Bass, is a former FD of that company, too.

We have sometimes argued that, if a barrister or a QC can be Chancellor of the Exchequer, then why can’t a barrister be a finance director? A controversial question, almost perfectly answered by Enterprise Oil chairman Sir Graham Hearne, a qualified solicitor and a former FD at Courtaulds.

So top-level British boardrooms are not short of highly technically qualified FDs. How this picture changes over the coming years will be interesting to watch. Meanwhile, there’s one question to ponder: does the rise of accountants and former FDs to the ranks of chairman and chief executive make it less necessary to have a qualified accountant in the FD role?

Does the spread of the beancounting FD make his own role redundant? We’ll be the first to tell you …

 FDs' accountancy qualifications
 ICAEW                 51
 ICAS                   5
 CIMA                  15
 ACCA                   6
 CIPFA                  2
 AICPA                  2
 Other/none            17
 No named FD            4
 COMPANY                     FD                    QUALIFICATION
 3i Group                    Michael Queen         FCA
 Abbey National              Ian Harley            FCA
 Alliance & Leicester        Richard Pym           FCA
 Allied Domecq               Tony Trigg            FCMA
 Amvescap                    Robert McCullough     CPA
 Asda Group                  Philip Cox            FCA
 Assoc Brit Foods
 BAA                         Russell Walls         FCCA
 Bank of Scotland
 Barclays                    Oliver Stocken        FCA
 Bass                        Richard North         FCA
 BAT Industries              David Allvey          MSCI, ATII, FCA
 BG                          Philip Hampton        CA, MBA
 Billiton                    Michael Davis         BCom SA
 Blue Circle Industries      James Loudon          MBA
 BOC Group                   Tony Isaac            FCMA
 Boots                       David Thompson        FCA
 British Aerospace           Richard Lapthorne     CBE, BCom, FCMA, FCCA
 British Airways             Derek Stevens         MBA, FCA
 British Energy              Michael Kirwan        FCA
 British Land                John Weston Smith     MA, ACII, ACIB, FCIS
 British Petroleum           John Buchanan
 British Steel               John Rennocks         FCA
 British Telecom             Robert Brace          FCA
 BSkyB                       Nick Carrington       FCA
 BTR                         Kathleen O'Donovan    ACA
 Cable & Wireless            Robert Lerwill        FCA
 Cadbury Schweppes           David Kappler         FCMA
 Carlton Communications      Bernard Cragg         ACA
 Centrica                    Mark Clare            FCMA
 Commercial Union            Peter Foster          FCCA
 Compass Group               Andrew Lynch          FCA
 Diageo                      Philip Yea            FCMA, FRSA
 EMI Group                   Simon Duffy           MBA
 Energy Group                Eric Anstee           FCA
 Enterprise Oil              Andrew Shilston       ACA, MCT
 GEC                         John Mayo             ACA
 General Accident            Philip Twyman         FIA
 GKN                         David Turner          FCA
 Glaxo Wellcome              John Coombe           FCA, FCT
 Granada Group               Henry Staunton        FCA
 Great Universal Stores      David Tyler           FCMA, MCT
 Guardian Royal Exchange     James Morley          FCA
 Halifax                     Roger Boyes           FCMA
 Hays                        David Tibble          FCA
 HSBC Holdings               Douglas Flint         CA, ACT
 ICI                         Alan Spall            FCA
 Kingfisher                  Anthony Percival      FCA
 Ladbroke Group              Brian Wallace         ACA
 Land Securities             James Murray          FCA
 LASMO                       Dick Smernoff         CPA
 Legal & General             Anthony Hobson        FCA, MBA
 Lloyds TSB                  Kent Atkinson
 LucasVarity                 Neil Arnold           FCMA
 Marks & Spencer             Robert Colvill
 National Grid               Stephen Box           FCA
 National Power              Roger Witcomb
 NatWest Bank                Richard Delbridge     FCA, MBA
 Next                        David Keens           FCCA, MCT
 Norwich Union               Michael Biggs         ACA
 Nycomed Amersham            Giles Kerr            FCA
 Orange                      Graham Howe           FCA
 P&O Steam Navigation        David Morris          FCA
 Pearson                     John Makinson
 Powergen                    Peter Hickson         FCA
 Prudential Corp             Jonathan Bloomer      FCA
 Railtrack                   Norman Broadhurst     FCA, FCT
 Rank Group                  Nigel Turnbull        FCA, MCT
 Reckitt & Colman            Iain Dobbie
 Reed International          Mark Armour           ACA
 Rentokil Initial            Christopher Pearce    FCA
 Reuters                     Rob Rowley            ACMA, MBA
 Rio Tinto                   Christopher Bull      FCA, MCT
 Rolls-Royce                 Michael Townsend      FCA
 Royal & SunAlliance         Paul Spencer          FCMA, FCT
 Royal Bank of Scotland      Robert Spiers         ACIS
 Safeway                     Simon Laffin          ACMA
 Sainsbury, J                Rosemary Thorne       FCMA, FCT
 Schroders                   Nicholas MacAndrew    FCA
 Scottish & Newcastle        Derek Wilkinson       CA
 Scottish Power              Ian Russell           CA
 Severn Trent                Alan Costin           FCA
 Shell Transport & Trading
 Siebe                       Roger Mann            FCA
 SmithKline Beecham          Hugh Collum           FCA
 Smiths Industries           Alan Thomson          CA
 Standard Chartered          Peter Wood            ACIB, FCT, FSS, BSc, MSc
 Sun Life & Provincial       Gilles Avenel
 Tesco                       Andrew Higginson
 Thames Water                David Luffrum         IPFA
 Tomkins                     Ian Duncan            FCCA, FCT, FIMgt
 Unilever                    Hans Eggerstedt
 United News & Media         Charles Stern         ACMA
 United Utilities            Bob Ferguson          IPFA
 Vodafone Group              Kenneth Hydon         FCMA, FCCA
 Whitbread                   Alan Perelman         MA, MSc, MCT
 Wolseley                    Steven Webster        CA
 Woolwich                    Rob Jeens             FCA
 Zeneca                      Jonathan Symonds      FCA
 The bulk of our research data came from the March 1998 edition of the
 Price Waterhouse Corporate Register. To keep the exercise as simple as
 possible, we have not made adjustments for any subsequent changes, such
 as, most tragically, the untimely death of BSkyB FD Nick Carrington.
 Other information was derived from institute members' directories and
 company annual reports.
 The Price Waterhouse Corporate Register is published by Hemmington Scott
 (0171) 278 7769.
 3i Group          Brian Larcombe                          3i
 Abbey National    Peter Birch            CBE, FCIB
  Alliance &
 Leicester         Peter White
 Allied Domecq     Antony Hales           BSc, MCIM
 Amvescap          (two chief execs)
 Asda Group        Allan Leighton
 Assoc Brit Foods  Garfield Weston
 BAA               Sir John Egan          MBA, FIC
 Bank of Scotland  Peter Burt             MA, FCIBS, MBA
 Barclays          Martin Taylor
 Bass              Sir Ian Prosser        FCA              Bass
 BAT Industries    Martin Broughton       FCA              Eagle Star
 BG                David Varney
 Billiton          Brian Gilbertson       MSc, MBL
 Blue Circle       Keith Orrell-Jones     FIMgt
 BOC Group         Danny Rosenkranz       BSc, MSc, DipBA
 Boots             Lord (James) Blyth     FRSA
  Aerospace        Sir Dick Evans         CBE
 British Airways   Robert Ayling
 British Energy    Peter Hollins
 British Land      John Ritblat           FSVA
  Petroleum        John Browne            MA, MS, FEng
 British Steel     Sir Brian Moffat       OBE, FCA         British Steel
 British Telecom   Sir Peter Bonfield     CBE, FEng, FIEE,
 BSkyB             Mark Booth
 BTR               Ian Strachan           MA, MPA
 Cable & Wireless  Richard Brown          BS (Comms)
  Schweppes        John Sunderland
 Carlton Comms     June de Moller (md)
 Centrica          Roy Gardner                             British Gas,
 Commercial Union  Sir John Carter        FIA
 Compass Group     Francis Mackay         FCCA             Compass Group
 Diageo            John McGrath           BSc
 EMI Group         James Fifield
                   (EMI Music)            BBA, MBA
 Energy Group      (two chief execs)
 Enterprise Oil    Pierre Jungels
 GEC               George Simpson
 General Accident  R A Scott              AAII
 GKN               CK Chow                BS, MS, MBA
 Glaxo Wellcome    Robert Ingram
 Granada Group     Charles Allen          FCMA, FHCIMA
 GUS               (no single chief exec)
 GRE               John Robins            FCT              Willis Corroon,
                                                           Fitch Lovell
 Halifax           Mike Blackburn
 Hays              John Napier
 HSBC Holdings     John Bond              FCIB
 ICI               Charles Miller Smith   (lapsed ACCA)    Unilever
 Kingfisher        Sir Geoffrey Mulcahy   MBA              British Sugar,
                                                           Norton Abrasives,
 Ladbroke Group    Peter George
 Land Securities   Ian Henderson          BSc FRICS
 LASMO             Joseph Darby
 Legal & General   David Prosser          FIA, FSIA
 Lloyds TSB        Peter Ellwood          FCIB, CIM
 LucasVarity       Victor Rice
 Marks & Spencer   Keith Oates            MCT              Marks & Spencer
 National Grid     David Jones
 National Power    Keith Henry
 NatWest Bank      Derek Wanless          FCIB, MIS, MA
 Next              David Jones            FCCA, FCIS       Grattan,
                                                           Kays Mail Order
 Norwich Union     Richard Harvey         FIA              Norwich Union
 Nycomed Amersham  Bill Castell           FCA
 Orange            Hans Snook
 P&O               Sir Bruce MacPhail     FCA
 Pearson           Marjorie Scardino
 Powergen          Edmund Wallis          CEng, FIEE,
                                          FIMechE, CIMgt
 Prudential Corp   Sir Peter Davis
 Railtrack         Gerald Corbett                          Grand Met,
 Rank Group        Andrew Teare
 Reckitt & Colman  Vernon Sankey
  International    John Mellon
                   (ch exec IPC)
 Rentokil Initial  Sir Clive Thompson     BSc, FCIM,
                                          FInstD, CIMgt
 Reuters           Peter Job
 Rio Tinto         Leonard Davis          FAusIMM, FRACI
 Rolls-Royce       John Rose              MA, FRAeS
 Royal &
  SunAlliance      Robert Mendelsohn
 Royal Bank        George Mathewson       CBE, PhD,
                                          FCIBS, MBA
 Safeway           Colin Smith            FCA              Safeway
 Sainsbury, J      Dino Adriano           FCCA
 Schroders         Peter Sedgwick
 Scottish &
  Newcastle        Brian Stewart          CBE, CA          Scottish &
 Scottish Power    Ian Robinson           BSc, FEng,
 Severn Trent      Victor Cocker          MIWEM
 Shell T&T         Mark Moody-Stuart
 Siebe             Allen Yurko            MBA
  Beecham          Jan Leschly
  Industries       Keith Butler-
  Chartered        Malcolm Williamson     FCIB, FIB,
                                          FIMgt, FInstD,
 Sun Life &
  Provincial       Mark Wood
 Tesco             Terence Leahy
 Thames Water      Bill Alexander         FEng, FIMechE,
                                          FIMinE, MIOD
 Tomkins           Greg Hutchings         MBA
 Unilever          (no one chief exec)
 United News &
  Media            Lord (Clive) Hollick
 United Utilities  Derek Green            FRICS
 Vodafone Group    Christopher Gent
 Whitbread         David Thomas
 Williams          Roger Carr
 Wolseley          John Young             CIAgrE
 Woolwich          John Stewart
 Zeneca            Sir David Barnes       CBE, FIMgt

Related reading