Flint gets tough
These have been diificult times for business leaders. But some corporate stalwarts believe a dose of stress is good for character.
In an interview for The Times, John Flint, CEO of the UK Infrastructure Bank, says business leaders should experience stress to test themselves. They should also hide their feelings to demonstrate to their teams they are in control.
“If you want to aspire to significant positions of leadership you need to go through these experiences as often as possible,” he says.
Horta-Osório fails Covid test
Another corporate leader causing a stir is António Horta-Osório, former chief executive of Lloyds Banking Group, who resigned this week from his role as chair of Credit Suisse after being found to have breached Covid quarantine regulations.
Horta-Osório said in a statement: “I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally. I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time.”
Auditing the auditors
It’s been another awful week for KPMG. Last week the Big Four firm made headlines after UK chief executive Jon Holt conceded his firm and some of its staff were guilty of “misconduct” during routine inspection of audit work relating to Carillion and Regeneris.
This week came two verdicts. First, the Financial Reporting Council (FRC) reached a settlement with KPMG and a partner, Stuart Smith, after they admitted “misconduct” in the Regeneris case. Smith has been excluded from membership of the ICAEW, his professional accountancy body, for three years, and fined £150,000. Sanctions on the firm will follow.
In another development, KPMG was fined £3m and severely reprimanded over the audit of AIM-listed booze retailer Conviviality in 2017 and 2018. The partner involved, Nicola Quayle, received a severe reprimand and was fined £110,000. Quayle and the firm were guilty of failing to revise their initial assessment of the firm and failed to collect “appropriate audit evidence”.
Conviviality has proved costly for other auditors too. In July 2020 the FRC handed down a severe reprimand and banned Kevin Engel, audit partner at Grant Thornton, from signing off audit opinions. A former senior audit manager, Natasha Toy, also received a severe reprimand. The sanctions related to work on audits between 2014 and 2017. Grant Thornton, the firm, was also reprimanded and ordered to pay costs of £207,000.
KPMG is not the only firm facing difficulties. The FRC revealed this week opened an investigation into the conduct of PwC over the audit of defence company Babcock International in 2020 and 2019.
In July last year, the company revealed a £1.6bn loss after it was forced to write down the profitability of its contracts.
Netflix calls ‘action!’ on governance
Media giant Netflix has agreed to amend its voting rules after pressure from investors. The streaming behemoth said it would reform its governance rules and do away with super majority voting for the election of directors. To date the subscription service has used a “plurality voting system” which permitted board nominees to be elected even if a majority of shareholders were in opposition. Governance reforms will also allow shareholders to call “special meetings”.
Netflix said the old rules had “served our shareholders extraordinarily well” but the company’s success could enable things to change. “So the Netflix board has decided to evolve to a more standard large-cap governance structure and will recommend several changes at our next annual meeting.”
Investors attempted to change the voting rules at previous annual general meetings. But they failed to win a super majority. There’s a surprise.
Red light at Go-Ahead
Lastly, anyone who thinks shareholder voting is a simple affair should look to events at Go-Ahead, the transport group. This week Adrian Ewer, the company’s senior independent director, exited the company’s board after it emerged there had been more votes at a recent AGM against his reappointment than first thought.
The company has blamed IT systems after it became clear that 3.2 million votes had not been counted.