On the money with Gavin Hinks

Sir Derek, who passed away suddenly last week, was the man who wrote the
Higgs Report on non-executive directors in the wake of the Enron and WorldCom
corporate collapses. The key report recommended CEOs should not go on to become
chairman at the same company. Chairmen should, in fact, meet a critical criteria
for independence.

And what a weapon that has become in the hands of activist shareholders and
corporate governance champions.

Oddly, it was the self same definition of independence that got Rose in
trouble over his investment in Lucky Voice, owned by Martha Lane-Fox, who
happens to be a non-exec on M&S’s audit and remuneration committees.

Oh dear. Cynics in the City therefore have a lot to be grumpy about when it
comes to Sir Derek. Well, no. An accountant who qualified with Price Waterhouse,
and went on to become a very successful investment banker, Sir Derek remained
well respected and spoken of in respectful tones.

At the time a senior Big Four partner told me that the non-exec job had been
touted round the City but nobody wanted to take it on. In fact it was viewed as
something of a poisoned chalice ­ – but the ostracism that was foreseen for Sir
Derek, never did take place. The report was viewed as balanced, fair and making
significant strides to drag the system of non-execs away from the old boy
network and into the modern era.

It was precisely because of Sir Derek’s reputation that it was taken so
seriously. So, next time there’s a beating in the press for someone over their
corporate governance remember, Sir Derek helped make it possible.

Gavin Hinks is editor of Accountancy Age

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