Tesco has lost a second non-executive director because of a conflict of interest.
By Amy Wilson
UK Telegraph
October 1, 2008
Mervyn Davies (pictured at far left in the wire rim glasses), chairman of UK bank Standard Chartered, resigned from the retailer’s board yesterday because of the potential conflict arising from Tesco’s expansion in financial services.His departure will leave Tesco with 14 board members, six of whom are non-executive, including chairman David Reid.
Non-executive directors, excluding the chairman, should make up at least half the board, according to the Financial Reporting Council’s combined code on corporate governance.
Carolyn McCall, chief executive of Guardian Media Group, resigned in April after Tesco started a libel action against the Guardian, which was settled with an apology from the newspaper group.
The supermarket giant’s expansion plans include agreeing to buy out Royal Bank of Scotland’s stake in its Tesco Personal Finance business for £950m in July.
It is looking at offering mortgages and current accounts as the credit crisis cuts a swathe through Britain’s banks and mortgage lenders.
To beef up its presence in the sector, Tesco is moving finance director Andy Higginson into a new role as chief executive of retailing services, which includes the personal finance business.
The retailer plans to expand financial services in its international business, which is where it would come into direct competition with Standard Chartered.
The bank has high street branches across Asia, and Tesco has stores in China, Korea, Japan and Thailand.
Tesco said it has no immediate plans to offer banking services outside the UK.
Mr. Davies joined the Tesco board in 2003 and will leave at the end of the month. Tesco chairman David Reid said he accepted the resignation “with great regret”.
Tesco’s remaining non-executive directors are: Rodney Chase, chairman of Petrofac; Charles Allen, former chief executive of ITV; Karen Cook, president of Goldman Sachs in Europe; Harald Einsmann, a board member of Carlson Group; and Ken Hydon, also a non-executive director of Reckitt Benckiser.
A spokesman for Tesco said the breach of the corporate guidance was temporary.
“We are already looking for a replacement for Mervyn Davies and we are close to announcing a replacement for Carolyn McCall that will redress the balance of executives and non-executives”, he said.
(Photo credit: Justin Thomas, UK Telegraph.)
What a pathetic journalistic attempt to manufacture a crisis out of nothing! Naturally this director had to resign, but his resignation is purely down to changed circumstances and doesn't reflect badly on him or on Tesco. It is hardly likely that Tesco will struggle to find a new director. Anyone who thinks Tesco's success or reputation depends on maintaining an arbitrary number of non-execs without a single day's disruption needs a brain transplant.
ReplyDeletelet's be clear here... Fresh & Easy buzz placed the sensationalist headline on this story. Of course it won't hurt Tesco's move into financial services that one director has had to resign due to an obvious conflict of interest. Maybe Tesco isn't perfect, but the newspaper had to offer a full apology for telling lies about them, and my guess is that high quality non-executives will be lining up to join their board.
ReplyDeleteIMHO it seems that this whole buzz thing would be more credible if those behind it were a bit more honest about their real agenda here.
The headline in green, "UK Telegraph: Could Latest Incident Hurt Tesco's Recently Announced Major Move Into the UK's Financial Services Sector?" was written by Fresh & Easy Buzz.
ReplyDeletePlease note it is in the form of a question rather than a statement.
This headline below (the bold back headline and the lighter sub headline)is that from the Telegraph story:
Tesco breaks governance standard
Tesco has lost a second non-executive director because of a conflict of interest.
If you click on the green link in the post on Fresh & Easy Buzz, where it says UK Telegraph, below Telegraph writer of the story Amy Wilson's name, that takes you to the original Telegraph story, where the headline "Tesco breaks governance standard" is. That's there's.