A lament in the City Comment column of the Business Section of the London Evening Standard - the paper read by most middle class commuters - Anthony Hilton tonight.
" while the caes described may be isolated, they are actually happening out there, and we ignore them at our peril"
The chairman of one of our larger companies told me the other day that when he was hunting round for a new chief executive last year, he assumed that he would be flooded with offers. He was shocked to find that the phone did not ring.
It got little better when he let the headhunters loose, for what he discovered - which was quite different from when he was beginning his career - was how few of today's ambitious 40 year olds have much interest in running a public company.
Their objections are not to the job but to almost everything that goes with it - the governance, the plethora of board committees, the excessive attentions of analysts and fund managers, the unpleasantness of pay and other personal details being publicly broadcast and the growing danger of being personally sued by disgruntled shareholders if something goes disastrously wrong. <<<
Separately, the director of an American listed company claimed that its audit committee, of which he was a member, now met monthly by telephone conference call and the meetings lasted three or four hours. He added that the legal advice the directors received was never to say anything because then they could not be held to account for their words. So they just listened.
We may not quite have reached that point here, but look at the trend. Twenty years ago, audit committees barely existed but when they did, they met annually. Then a meeting to coincide with the interims was added. Now it is the norm for them to meet quarterly, and the meetings run for three or four hours.
In this country, it may still be permissible for members to speak, so we are not quite as process-driven as the US, but there are still odd things happening. I heard of a retired senior partner of one of the big four accounting firms sho has let his membership of the Institute of Chartered Accountants lapse and has advised his accountant friends to do likewise. Not paying the sub means the member loses the right to use the letters FCA after his or her name. This lowers the profile and makes the director less of a target if something goes wrong. <<<
COMMENT by CB
If this article could just blame government bureaucracy it would. But it doesn't. Indeed some of the most striking examples of the burden of public scrutiny come from the even "freer" market of the US.
It is not just a moan in the wider fabric of supply and demand, implying that to avoid this shortage of supply, they should just offer even more monumental salaries to the highest flyers. But those salaries would not only now be published. More significantly there is a web of public accountability even though capitalist laws of production apply and the companies are privately owned - increasingly often by other corporations of fund managers.
The author speculates that there could be a further move away from the public company as an embodiment of the ownership of the means of production by a capitalist - a collective structure in which there is a division of powers, to ensure safety to public scrutiny - a chairman obliged to come from outside with his power circumscribed by the head of the sudit committee, by the snior non-excutive director (cince the non-exec's will no longer be able to trust the execs), and probably by the head of the nominations and remunerations committee, leading to four separate centres of power - five if you count the chief executive.
Whatever permutations in structure of these seriously publicly accountable companies, this is now a gilded stratum of higher intelligentsia subtly different from the capitalist magnates of the past, caught up with risk management and management of public perceptions, momentum and the laws of chaos theory.
This is a further twist in the socialisation of the means of production, inseparably linked with the increasing rationalisation of finance capitalism. Is it really possible to bring back red-blooded owner-entrepreneur capitalism? Probably not as the dominant mode of capitalist production.
Chris Burford London
