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FTSE 100 FDs: Secret to their success

>THE RECESSION HAS been and (hopefully) gone leaving a whirlwind of changes, including the backgrounds of management in leading UK companies and the gender gap closing – albeit slightly – in its wake. There is no company, or industry in the UK that is quite the same as it was pre-recession. With this in mind, Financial Director has decided to revisit its FTSE 100 FDs accountancy qualification report, three years since it was last published in 2009.

Now on its third leg, with the first report published in 1998, the results of the research show many FTSE finance directors’ have had international experience.

FTSE 100 FDs: A-H

FTSE 100 FDs: H-X

Finance chiefs of the top companies are fast becoming a mixture of globally experienced people. More than a fifth of FDs obtained their qualification from outside the UK. There are 16 qualified accountants from non-UK institutes and seven who completed their degrees outside these shores.

The number of international institutes has nearly doubled from the nine seen in the 2009 table, and has smashed the record of two in the 1998 list.

Meanwhile, companies whose FDs have a degree from another country include Anglo American, BG Group, Eurasian Natural Resources, Fresnillo, International Consolidated Airlines and J Sainsbury.

The South African institute, SAICA, continues to be the most popular non-UK accountancy body with the finance directors from SABMiller, Xstrata, International Power, Marks & Spencer, National Grid, Rangold Resources and Standard Life all achieving their credentials through the institute. However, both the US and Indian institutes have seen their presence double in the UK to four this year from two, and three from one respectively in 2009. There was also a new entry from Australian institute the ICAA, with BHP Billiton’s Graham Kerr and Glencore’s Steven Kalmin entering the chart with those qualifications under their belt.

Experience of working in another country is also highly revered among the elite finance chiefs. Of the 100, at least 33 CFOs gave information of roles which saw them stationed outside the UK as part of their job prior to taking the helm in their current role. For example, Tullow Oil’s Ian Springett spent 23 years in the US office of BP; WPP’s Paul Richardson qualified as a bankruptcy trustee in Canada; and Aggreko’s Angus Cockburn – who in addition to an ICAEW qualification has an MBA from Switzerland – spent five years based in PepsiCo’s Budapest office and worked in the US office of KPMG.

“If you do not have international experience, it will limit your career progression,” explains Mark Freebairn, partner in the CFO practice of headhunter Odgers Berndtson, to Financial Director. “When you get to the top level in finance, the difference between you and the opposition is almost zero.”

A degree of success

International experience is not the only credential to see a rise in the background of the FDs. A record breaking 15 have a degree and not an accountancy institute qualification.

Similarly to the 2009 report, the majority of FDs without an accountancy institute qualification are in the mining or gas exploration sector, with eight of the 15 working in this industry. However, there are no CFOs working in the financial services sector without an institute title, unlike the 2009 table which saw Royal Bank of Scotland and Prudential’s FDs in this category. Our report also shows a trend now being sported by the pharmaceuticals industry with both AstraZeneca and GlaxoSmithKline employing FDs with just a degree.

Unilever is the only consumer company to continue with its strategy of employing a non-institute accomplished FD. Jim Lawrence, FD in 2009, had a Harvard Business School MBA and now Jean-Marc Huet has an MBA.

Rio Tinto’s Guy Elliott, who does not have an institute title, previously said in a Financial Director interview: “I don’t want to beat a drum on the subject, but there are several types of CFO.

“I don’t pretend to be a great expert on the minutiae of accounting standards, but I don’t feel at a disadvantage not being an accountant, either. I would even say that my background in marketing, in operations management, in strategy, helps me in the job. An accountant has a particular way of looking at things and I’ve picked up some of that – but my perspective is probably somewhat different.”

Let’s hear it for the girls

Most incredible of all is the dramatic turnaround of female FDs entering the top league, with nine in total. Women at the top include: British Land’s Lucinda Bell, Burberry’s Stacey Cartwright, Cairn Energy’s Jann Brown, CRH’s Maeve Carton, Diaego’s Deirdre Mahlan, Eurasian’s Zaure Zaurbekova, Hargreaves Lansdown’s Tracey Taylor, Reckitt Benckiser’s Liz Doherty and Standard Life’s Jackie Hunt.

Although nine may not seem as though it is pushing through the glass ceiling, it is a huge increase from the one female finance director in 2009’s report (Jaan Brown) and the two in the 1998 report (BTR’s Kathleen O’Donovan and J Sainsbury’s Rosemary Thorne).

Many of the ladies are new to the role, either joining the company, or the company joining the FTSE 100, post our 2009 report. The most popular year for recruiting female FDs in the top companies was in 2010 with three taking up posts, closely followed by 2011 with two.

This could be the most women to grace the FTSE 100. It is a step in the right direction as the government hopes to achieve a target of at least 25% of FTSE boards occupied by women, by 2015.

However, in a previous interview Standard Life’s Hunt believes the drive to the top must be a personal choice and that there is “validity” both in continuing to climb the career ladder and in easing off.

Hunt is one of nearly a fifth of FDs to take up their role in 2010. It was seen as the most popular year to recruit a finance director with 19 FDs joining in this year. According to the report, 11 FDs have been appointed since 2008, ten since 2009, 19 since 2010, 12 last year and three this year.

The longest serving FD on the table is Imperial Tobacco’s Robert Drybus who joined Hanson as FD in 1989 which later became Imperial Tobacco. Second to him is Aberdeen Asset Management’s Bill Rattray and Next’s David Keens. Both were appointed in 1991.

There is a bit of a gap between 1991 and 1995 with no FDs joining and staying put during this time. Then in 1996 Capita, Imperial Tobacco, Reed Elsevier and WPP CFOs joined and stayed put for 16 years. Staying put is a theme for the top companies; more than one in ten of the FDs have worked in their role for longer than ten years, and nearly half (44) were recruited pre-recession in 2008.

Promoted to power

About 33 of the FDs have been promoted to power. WPP’s Paul Richardson joined the company in 1979, although there is no information about his roles at the company at the time of his appointment. Next’s Keen joined in 1986 as the company’s first group treasurer and Shell’s Simon Henry began working as an engineer for the business in 1982. Others to have spent decades in their company include Rio Tinto’s Guy Elliott, who joined in 1980; British Land’s Lucinda Bell in 1991; BSkyB’s Andrew Griffith (1999); Bunzl’s Brian May (1993) following a merger; and Sage’s Paul Harrison who joined in 1997 as group FC.

Previous sector experience is also a major plus. Of those FDs that have been brought in from outside the company 28 have previously worked within the industries associated with their current companies, while others such as Jackie Hunt of Standard Life, who was promoted from deputy FD, had previously worked at insurance company Norwich Union.

Insurance appears to be one of the main areas where having form in the industry is a must. Aviva’s Patrick Regan had worked at brokerage firm Willis as well as Royal & Sun Alliance, while Richard Houghton, who is to replace George Culmer at RSA, was nabbed directly from Apsen Insurance.

Interestingly, the only other sector to have such cross fertilisation among its finance chiefs is mining and gas exploration where there is a notable lack of accounting qualifications. It seems sector knowledge trumps all else with nine of the 15 working in the industry having emerged from backgrounds associated with the sector.

The Big Five also feature in the table with four FDs taking on their role directly from being partner at a firm. Barclay’s and Reed Elsevier recruited ex-PwC partners; Compass’ Arthur Anderson, and Weir from Ernst & Young.

Overall, the table shows that variety is the spice of FTSE life with more women, more international qualifications, more international experience and a healthy mixture of recruiting from within and outside a company all featuring highly on the latest foray into understanding what makes a FTSE 100 FD. ?

 

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