As anyone who knows me really or virtually will not be surprised to read, it’s been hard for me to keep my mouth shut – hard for me not to blog!
So I will blog, periodically, episodically, today about one of the most under-appreciated and least-discussed trends in global business. It’s the decline of the CEO – the diminishment of his (still, almost always, “his,” not hers) power, authority, and influence.
I am not saying anything startlingly new. In fact, I blogged about just this subject on December 21st. But in recent weeks have been fresh reminders of a trend now so strikingly in evidence it’s beginning to amount to a game changer.
I will spare you a list of examples that have piled up even in the last few months. Instead I will mention only two.
The first is what’s been going on in Sweden. After a property scandal, Swedbank lost both its chairman and chief executive officer. Another bank, Nordea, was called “shameful” by Sweden’s prime minister, Stefan Lofven, for helping clients with offshore investing. (Nordea’s transgression was made public by the leaked Panama Papers.) In 2013 was a boardroom shakeup at TeliaSonera, the telecommunications company, over corruption in Uzbekistan. And in 2015, the forestry group, SCA, ran into trouble over the use of corporate jets by executives and their families.
Such upheavals are all to the good. Corporate governance in Sweden is working as it is intended to work. In so far as is reasonably possible, it is keeping management on the straight and narrow. How? By giving Sweden’s investors control over the composition of boards – as opposed to giving such control to the boards themselves. While this confirms the effectiveness of a system in which, for once, the fox is not charged with watching the hen house, it similarly confirms that greed is pervasive, even in the fantasyland that is Scandinavia, and that, increasingly, there is a willingness to throw the rascals out.
The second example of the decline of the CEO is what happened just this week at BP (formerly British Petroleum), one of the world’s “supermajor” oil and gas companies. Angry shareholders mounted an unprecedented protest again the company, rebelling against a 20 per cent pay rise for CEO Bob Dudley. Who could blame them? The board’s decision to pay Dudley nearly $20 million for 2015 came hard on the heels of a miserably bad spell for BP – the company recorded its biggest ever financial loss, axed thousands of jobs, and saw its share price crater.
What was BP’s board thinking?! Was it aching for a breaking?! Board members beware! Your failure to read the handwriting on the wall is much more likely than it used to be to result in your collective rejection and individual embarrassment.