Wednesday night (11 October) signalled the end of an era on the UK corporate scene. Greg Hutchings has resigned from his post as chairman at the head of the engineering conglomerate, Tomkins.
An autocratic leader, who had enjoyed 17 years of large salaries and bonuses, Hutchings was no stranger to corporate criticism. His 1980s heyday swiftly closed on a sour note as his stubborn refusal to take on board corporate governance guidelines, to split his self-appointed role as chairman and CEO until June of this year, and to fully explain his use of company assets shredded shareholders’ nerves.
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Peter Butler, corporate focus director at Hermes Pension Management, one the largest shareholders at Tomkins, explained: “When issues arise that put independent directors on the spot they have to deal with them, that’s what the job is about. When you’ve got confidence in the independent directors, life becomes more straightforward for shareholders. Shareholders shouldn’t have to get involved in these matters.”
The questions that were to lead to his downfall were first asked at an annual shareholders meeting last month. Why did the group use four private jets? And one helicopter? The issue of Hutchings’ two company flats in Belgravia and Peninsula Heights, London, being used for “improper purposes” was raised. And why were Mrs Hutchings and the chairman’s housekeeper paid via the Tomkin’s payroll?
Such flagrant extravagances were Hutchings’ undoing, and have certainly raised some doubts about his proposed £3m compensation pay-off. Tomkin’s chairman, David Newlands, has now assumed the role of CEO and demanded a full historic and current review of the “corporate excesses,” to be completed as soon as possible.
He explained that when Hutchings’ revealed his decision to resign, a response, it seems, to the investigation; “the board had lost confidence in his ability to lead the business so we accepted his decision.”
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By GlobalDataFlexing his corporate muscles for the first time since joining the company four months ago, Newland also called in the auditors, Arthur Anderson, to investigate the authorisation of various financial matters and the Inland Revenue submissions. He has also asked for an external review of directors’ pay, and for the joint brokers, Cazenove and UBS Warburg, to assess current shareholder sentiment in light of the company’s poor share price performance recently.
With the announcement of Hutchings resignation, Tomkin’s stock climbed 5p to 170p.
