This article is the subject of a complaint from Mike Ashley and Frasers Group
What does a chief executive have to do to get fired these days? Peter Hebblethwaite, boss of P&O Ferries, appeared before parliament last Thursday to try his damnedest. He admitted there was “absolutely no doubt that we were required to consult with the unions” before laying off 800 seafarers — but that “we chose not to do so”. Asked whether P&O thought it could simply absent itself from the British legal system, Hebblethwaite said the board had decided the changes in pay and terms it wanted to push through were “of such a magnitude that no union could possibly accept our proposal”. P&O’s ships are flagged in the Bahamas, Bermuda and Cyprus — but it didn’t abide by its responsibilities there, either. Instead it sought to buy its way out of legal obligations with £36.5 million of redundancy payments.
For most corporate leaders, this would be terminal stuff. Not so for P&O’s haggard captain. When transport select committee chairman Huw Merriman asked his paymaster, DP World’s Jesper Kristensen, whether it would throw Hebblethwaite overboard, he said: “I cannot imagine that we would do that.”
That may yet change. Boris Johnson, never one to miss an easy opportunity for populist point-scoring, added his voice to calls for Hebblethwaite to quit. Dubai-owned DP World has government links via two designated freeports.
But Hebblethwaite and the prime minister may soon have something in common. If Johnson is given a fixed penalty notice by the police for breaking his own Covid edicts with partygate, you can be sure he’ll cling on to the No 10 door frame with his fingertips, and he’ll probably get away with it. In an age when behaving honourably carries less weight, bosses can flout the rules and escape with a scolding provided they have supportive shareholders.
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Those who don’t, tend to come a cropper. Steve Easterbrook stood down from McDonald’s and handed back $105 million after he was exposed for affairs with colleagues. Credit Suisse chairman António Horta-Osório was out within nine months thanks to his prioritisation of Wimbledon above Covid travel rules. Allegra Stratton delivered her lachrymose resignation from No 10 for joking about a Downing Street party that supposedly didn’t happen.
Entrepreneurs, or bosses deemed valuable by a majority shareholder, though? That’s a different story. Mike Ashley, billionaire founder of Frasers Group, has come out with a million comments that would have toasted the average chief executive — once telling a court that he was a “power drinker” — yet declined to dismiss himself.
Peter Cowgill, his rival at JD Sports was fined £4.3 million last month for a dubious meeting in a car park with the head of a company he was trying to buy. Cowgill has been the engine behind JD’s massive share-price growth over the past 18 years, however. So JD’s big backer, the Rubin family’s Pentland Group, turns a blind eye to his misdemeanours.
Tesla tycoon Elon Musk has smoked dope on air and played cat-and-mouse with the US stock market regulator. Ivan Glasenberg, whose executive team held meaningful equity stakes, managed to run commodities giant Glencore in a far edgier way than any mere employee could have done. Even Johnson, soiled by his Covid bumbling and myriad lapses of integrity, can look at his 80-seat majority, then at his cabinet, and shrug.
This has an interesting implication for DP World, which has been at pains to distance itself from the sacking of staff on average salaries of £36,000 and their replacement by agency workers on £5.50 an hour. Asked whether the Dubai company forced P&O to make the move, Kristensen told MPs P&O was “a business in its own good right” and that “at the end of the day, the operational decisions in P&O Ferries are for P&O Ferries”.
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Its actions speak otherwise. For his £325,000 a year (plus two bonus schemes), Hebblethwaite is acting as a human sponge, soaking up outrage. DP World will keep him in situ so long as it sees value in his absorbent qualities. After that, he’ll be tossed aside and a new chief executive will come in to try to repair the brand damage. If you want to see who’s responsible for the P&O debacle, look beyond the perspiring figure in Westminster to Sultan Ahmed bin Sulayem, DP World’s overlord. The very fact of Hebblethwaite’s continued employment is all the proof you need.
Asos in the shop window
Shares in Rolls-Royce spiked on Friday afternoon in response to takeover speculation by the cheeky financial blog Betaville. Even as the war in Ukraine stymies equity-raising activity, private equity continues to prowl the public markets for targets — as per recent interest in Pearson and Ted Baker.
Asos, Boohoo and THG make an intriguing trio of possible candidates. The one-time darlings of e-commerce are in tatters, their share prices down by about three-quarters in the past year.
Some of this will be due to fading appetite for growth stocks, but all three have self-inflicted wounds, too. Boohoo and THG have governance problems that may be unfixable while their combative founders stay as executives. Asos, having suffered warehouse IT problems a few years ago, issued a profit warning last October, parting ways with Nick Beighton, the boss who took over from founder Nick Robertson. Chairman Adam Crozier left for BT shortly after.
Of the three, Asos offers the clearest turnaround opportunity. It has lagged rivals, but still has a strong brand. Supply-chain issues should unwind, although weaning it off China would be difficult. At £15.62, the shares value Asos at just £1.6 billion. If Danish tycoon Anders Povlsen could be persuaded to roll over his 26 per cent stake, that’s relatively bite-sized for a buyout giant.
