Meet the new breed of chief executive: closer to kindergarten than retirement age
Financial Times
Are chief executives getting younger? Or, as with policemen, is their youth simply in the eye of the beholder?
This week, HBOS announced that a stripling of 38, Andy Hornby, is to take over as chief executive of the bank in the summer.
Worse, the man he is replacing, James Crosby, is himself a mere 49.
According to Heidrick & Struggles, the executive search group, there are are 60 chief executives in the FTSE 350 who are aged 45 or under. To many, there seems to have been a rash of appointments of younger people to top boardroom jobs in recent years.
They include Simon Wolfson, who became chief executive of Next, the retailer, at the tender age of 33 in 2001; Adam Applegarth, who was 38 when he was promoted to the top job at Northern Rock in 2003; and James Murdoch, who was hardly out of short trousers when he became chief executive of BSkyB aged 30, also in 2003.
At the other extreme, where today are the likes of Lord Hanson, Lord King, Lord Weinstock and Garry Weston, who were all still running substantial companies into their 70s? Aside from Sir Ken Morrison, 74, at Wm Morrison, and Sir John Ritblat, 70, at British Land, it is hard to find any.
Under modern corporate governance guidelines, the over-70s are frowned on.
But even a search for chief executives older than 60 yields slim results as more retire in their late 50s to 'go plural' or move into private equity.
BoardEx, which collates data about directors, calculates that the average age of chief executives and executive chairmen of FTSE 350 companies has fallen by a year in each of the past four years, from 56 in 2002 to 53 in 2005. If that trend continued, the average age of a chief executive would reach Andy Hornby's current age by 2020, when presumably the very youngest example of the phenomenon would be juvenile indeed.
Cynics might point out that many of the youngest appointees are all related to former chief executives or to families with sizeable shareholdings in the company. This, for example, is the case with Mr Murdoch and Mr Wolfson, as well as Viscount Rothermere, who was 30 when he became chairman at Daily Mail and General Trust in 1998, and George Weston, who last year became chief executive of Associated British Foods at 41. However, the fuss made over Mr Murdoch's appointment demonstrates that outside shareholders now take a much tougher line at the faintest whiff of nepotism. And Mr Hornby's appointment suggests that merit can bring early promotion too.
According to Samuel Johar, of Buchanan Harvey, the executive search firm, "over the last 10 or 15 years there has been a distinct trend towards appointing younger chief executives. Fifteen years ago, a chief executive of a FTSE 100 company in his 30s would have been unheard of". If you include people in their early 40s, there are even more.
As well as Mr Weston, Richard Baker was 41 when he became chief executive of Boots in 2003 while Kevin Beeston had scored a notable hat-trick, being finance director, chief executive and then executive chairman of Serco, the support services company, by the age of 40.
He is still only 43 and Serco's current chief executive, Chris Hyman, is 42.
Mr Johar reckons today's pressures on chief executives require a level of energy and enthusiasm that the more, shall we say, mature person, may not have. Twenty years ago, he suggests, chief executives delegated far more and travelled far less than they do today.
As chief executives have become the focus for criticism of companies' performance, and as companies have diversified geographically, chief executives are increasingly involving themselves in the detail of running their businesses and travelling long distances to do so. Mr Hyman, for example, spends at least a third of the year visiting the 37 countries in which Serco has contracts. And even the youthful Mr Crosby was complaining on Thursday about having to get up at dawn to catch the early flight from Edinburgh to London.
Luke Meynell, of Russell Reynolds, an executive search firm, thinks chief executives in their 30s are still the exception but that most appointees are now in the 45 to 55 age range. After that, he says, "there is a tendency for nomination committees to ask whether individuals have the same level of energy and drive". Committees expect their chosen person to stay for at least five years, he says, so they consider carefully before appointing someone of 57 or more.
However, Stephen Bampfylde, chairman of Saxton Bampfylde Hever, another executive search group, argues that there is no firm evidence of companies deliberately hiring younger chief executives. He says: "Over the last 10 years, it has happened from time to time - usually in circumstances where huge brains are given higher priority over huge experience."
He cites Archie Norman, who was 37 when he became chief executive at Asda in 1991, and other similar examples. "Having the intellectual horsepower can substitute for not having worked in the company for many years. What clients want is the best athlete for the role. Just having years and years of experience is not enough."
Many argue that the the willingness to appoint younger people is to be welcomed, if they get their jobs on merit.
Peter Montagnon, head of investment affairs at the influential Association of British Insurers, says: "Investors really look at performance, they don't stereotype by age."
Mr Johar, of Buchanan Harvey, says: "It is a good thing in the sense that chronological age is no longer considered to be a huge factor in the evaluation of somebody's ability to doa job. Also it means there are more 55-year-olds ready to take on non-executive jobs."
David Peters, managing partner of the London office at Heidrick & Struggles, agrees: "The time when you had to have mileage on the clock, for its own sake, before you were considered for the job is largely behind us. It is now all about ability and readiness."
It is rather like the anxious mother who wrote to an agony aunt asking if her 16-year-old daughter was old enough to wear a strapless dress. The reply came back, "get her to put on the dress. If it stays up, she's old enough".
Mr Bampfylde told De Vere Hotel Group when it appointed Carl Lever chief executive at 34: "If he is good enough, he is old enough."
