So farewell, Greg Hutchings, chief executive of Tomkins, whose catchphrase was: “We will deliver competitive earnings growth for shareholders.” “I built this company up from nothing,” was another.
I have a problem with the tragedy of Hutchings. It’s easy enough to get a handle on the hubris – the windsurfing breaks, the extended trips to Rio at Carnival time, the self-indulgence with rather more company jets than is strictly necessary, the two flats for personal use in London and the wife on the payroll.
But I have greater difficulty with his nemesis. On paper, this was a skilful piece of journalistic exposé. Skilful because Ruth Fawcett, a fund manager at JO Hambro Capital Management, was fed very specific questions about company perks to ask at the Tomkins annual meeting, the correct answers to which were already in the hands of detractors. Any dissembling on the part of Hutchings instantly delivered a cracking story.
My problem lies with the individual, a former stockbroker called Robert Tennant-Ralphs, who has invested a year building the grubby dossier against Hutchings that led to his resignation last week. Of course, I accept that tawdry behaviour is sufficient grounds for the resignation of a public company’s chief executive. It doesn’t have to be illegal behaviour – and I have heard nothing to suggest that Hutchings has done anything illegal. As current vernacular has it, hold that thought.
There are some very obvious questions that need to be asked. The shock and dismay now being expressed by Tomkins chairman, David Newlands, leads me to one such question.
Newlands seems to say that Hutchings was well out of order and had to go, but that the bigger issue is the way this was handled in the public arena as a result of a security leak involving an insider. Newlands says: “If someone had written to me as chairman, that would have been a more proper way of going about it.”
But isn’t it a chairman’s job, assisted by his non-executive directors, to monitor and regulate the standards of the executive directors, without waiting to be told about abuses by some whistle-blower? To put it another way: shouldn’t well-remunerated chairmen and non-executives be demanding the resignation of a chief executive who has been involved in malpractices before they read about such goings-on in the newspapers?
No one has suggested that Hutchings secretly visited the Mardi Gras, secretly ran four company jets or secretly purchased two London flats. We have no evidence that Hutchings listed payments to his wife and housekeeper in the management accounts as “stationery”, “coffee machine” or “corporate hospitality”. So, at one level, Newlands’ dismay would appear to have arisen more from the fact that details of Hutchings’ perks have been made public than that they existed in the first place. It is interesting that Newlands has instituted an internal security inquiry to discover the source of the leaks.
I leave the role of Tennant-Ralphs for others to judge. He claims to have been enjoined by the chairman of a public company to mount a campaign against Hutchings, with a brief “to get him out”. Following the collapse of Tomkins’ share price – after market sentiment turned against conglomeration (the acquisition of Ranks Hovis McDougall was always seen as a step too far) – it might have been more edifying for Hutchings to have been challenged on performance, rather than on his windsurfing or holiday habits.
It is a feature of Greek tragedy that the great man falls low through his small deeds and at the hands of small people. That would seem to be the case here. But who are these people, and why are they saying these things?
Tennant-Ralphs had apparently asked Derek Bonham, former Hanson chief executive, and Bob Mackenzie, chief executive of National Car Parks, to take over at Tomkins. Tennant-Ralphs also tried to put a landing party together with stockbroker Cazenove, before it dumped him. But the extraordinary thing about his ginger group is not that they did all this, but that they could.
Much of the downfall of Hutchings has echoes of the old “fat cat” issue that preceded the 1997 general election and was aimed principally at privatised utility managements. It was often said at the time – particularly in New Labour quarters – that there was no objection to those who earned great wealth by building companies; it was those who inherited them from the public sector that shocked the new guardians of morality.
With the fall of Hutchings, a man who built Tomkins from a tiny shell that was FH Tomkins to the weapons-to-bread conglomerate worth &£4bn at its peak, and served not a few shareholders’ best interests, that kind of flaky political philosophy is exposed as nonsense. In America, Hutchings might have been chucked out on his ear, but it would have been for performance, not for a raft of self-indulgent perks.
It’s interesting that when today’s top executives leave their posts, they talk about going into “private equity”, the venture-capital industry that probably has the closest feel to US entrepreneurialism. I expect Hutchings will do so. Similarly, Allan Leighton, formerly of Asda and Wal-Mart, is “going plural”, with a variety of entrepreneurial interests. This is all very well, but what entrepreneurs will be left to run British publicly-listed companies?
George Pitcher is a partner of issue management consultancy Luther Pendragon