Despite topping 7000 for the first time in its history, the blue-chip FTSE 100 index finished down in 2016.
Still, perhaps more damaging to the fragile self-esteem in testosterone-filled boardrooms was the make-up of one particular group of five FTSE 100 chief executives that did seem to do well.
The five big firms run by women – Véronique Laury at Kingfisher, Liv Garfield at Severn Trent, Moya Greene of Royal Mail, Alison Cooper at Imperial Tobacco and Carolyn McCall at easyJet – all outperformed the market in 2016. Only Kingfisher lost investors money, but still did better than the market as a whole.
It is far from a statistically significant sample of course – and the female FTSE performance is helped by the reluctance of certain sectors to hire women to their boards. Mining had a terrible year and only men run those firms – although in that sector women have shown themselves to be equal to men. When Cynthia Carroll ran embattled Anglo American, the market thought she was just as blundering as any male boss could have been.
The beginning of the year, and the end of the aisle for Dalton Philips.
The routinely maligned boss of the supermarket chain Morrisons finally checked out after a five-year spell at the grocer, which the City succinctly summarised like this: Philips broadly made two mistakes; firstly, taking a long and expensive route reversing the errors of predecessor-but-one Sir Ken Morrison; and, secondly, introducing some blunders of his own.
All of which, perhaps, leaves Philips with a legacy of not quite squeezing into the list of the top five bosses ever to lead Morrisons. There have been six.
HSBC used to claim it was the world’s local bank – but it seems it was a bit too local for some of its moneyed customers, who preferred stashing funds slightly further afield, in Switzerland.
Swiss banking secrecy laws meant that this arrangement worked out just splendidly for both the bank and its customers, until some dreadful chap called Hervé Falciani came along and nicked a load of files. Amazingly for a bank based in Switzerland, the pilfered documents showed that there might have been a bit of tax dodging going on.
All of that was known before 2015, but then came the so-called “HSBC files” – a massive leak of the data to the Guardian, the BBC, Le Monde and other media outlets that showed that HSBC’s Swiss banking arm had turned a blind eye to illegal activities of arms dealers and helped wealthy people evade taxes.
Shocked HSBC bosses lined up to say they knew nothing about these shenanigans at the time – and hardly anyone doubted their claims. In fact, only complete cynics (and Casablanca fans) even thought to compare their lines with those of Captain Renault.
They wanted Mike Ashley. They got Keith Hellawell.
When the Scottish affairs select committee called the billionaire founder of Sports Direct for a grilling about his company’s business practices, it failed to take into account either (a) his busy schedule or (b) his aversion to those pesky security procedures you need to go through to gain access to parliament. So the genius retailer declined the committee’s invitation to pop along to Westminster for a chat and sent his chairman, former chief constable Hellawell, in his stead. The result still lives vividly in the memory.
Hellawell proceeded to give possibly the most inept performance ever delivered by a FTSE 100 chairman in front of a parliamentary select committee (from a very strong field), as he was mauled by MPs considerably less forgiving than a pair of Dunlop tracksuit bottoms.
It was humiliating for Hellawell, who presumably consoled himself with the thought that the year could not possibly get any worse. Could it?
Picture the scene. You are 36 years of age and live at home with your parents in Hounslow, west London. You keep a low profile, even in your own household.
There is a knock on the door. It’s the police. Oh dear, has next door lost their cat? Er, no. The constables are visiting on behalf of the US Department of Justice (DoJ), which has just begun extradition proceedings against you for helping bring down the world’s financial markets.
That was (broadly) the scene in April when the US authorities alleged that Navinder Singh Sarao, dubbed the “Hound of Hounslow” in a reference to Martin Scorsese’s film The Wolf of Wall Street, had “spoofed” markets from his parents’ semi-detached home, using commercially available software to place $200m of false trades.
The agency added that the supposed market manipulation contributed to the “flash crash” on 6 May 2010, when the Dow Jones index plunged 600 points in five minutes and created havoc in the world’s financial markets, before largely recovering the same day.
Anyway, Sarao, who says he’s done nothing wrong, was granted bail at £5m – a fortune that it turned out he actually possessed, except the Americans had frozen his accounts so he couldn’t touch it. He remained in prison until his bail terms were altered in August. His extradition case returns to court in 2016.
It takes a lot of effort – or a room full of lawyers – to make the tragic story of two children killed by carbon monoxide poisoning in a hotel in Corfu in 2006 worse. But Thomas Cook achieved just that in 2015.
Peter Fankhauser, the tour operator’s chief executive, was obviously not personally at fault for the deaths, but he sanctioned a response that guaranteed he and his company came across as devious and insincere.
Having refused to apologise (“there’s no need to apologise because there was no wrongdoing by Thomas Cook”), he partially relented, eventually saying sorry to the family “for all they have been through”. The words, presumably, were dictated by lawyers because it was impossible to tell if Thomas Cook was admitting any failings or not. An inquest in Wakefield in May was less equivocal. It found the company breached its duty of care to the family.
While the Thomas Cook case will be used for decades by MBA professors as a lesson in how not to deal with a disaster, June quickly provided an example of how to do it a bit better.
Nick Varney, chief executive of Merlin Entertainment, was grilled about an accident on The Smiler ride at the group’s Alton Towers park, which left 16 people injured. Varney managed to appear sincere when he quickly apologised – “We are deeply sorry for the accident that happened” – which curiously meant that an alternative villain briefly emerged.
Sky News’s Kay Burley, who during an interview kept probing Varney for details of the victims’ injuries, prompted almost 2,000 complaints to media regulator Ofcom about her questioning. Burley was cleared.
When Antony Jenkins became boss of Barclays in 2012 he unveiled a quest to create the “go-to bank”. Not for him it ain’t. Jenkins discovered in July that he’d be going to Barclays no longer, when he was sacked over the phone.
Sir Michael Rake, a longstanding Barclays director, said the board was forcing Jenkins out because “notwithstanding Antony’s significant achievements, it became clear to all of us that a new set of skills were required for the period ahead”. What those coveted skills were emerged in October, when Barclays hired Jes Staley, a US investment banker, to take Jenkins’s job.
Barclays has been led by a US investment banker before, of course – Jenkins’s predecessor Bob Diamond, who was ousted during the 2012 Libor crisis following a personal intervention by the governor of the Bank of England. Staley has since promised that Barclays’s relationships with regulators will be “collaborative, not adversarial” – which will make a nice change.
The bad news for former City trader Tom Hayes was that he was sentenced to 14 years in jail in August after becoming the first person to be convicted by a jury of rigging the Libor interest rate. The slightly less bad news was that the stretch was reduced in December to 11 years.
Hayes, 35, a former UBS and Citigroup yen derivatives trader, was convicted of eight counts of conspiracy to defraud in August. The former trader, who was diagnosed with mild Asperger syndrome just before his trial began, said he was transparent about trying to influence rates and his managers were aware.
When Volkswagen got caught cheating on nitrogen oxide (NOx) emissions tests in September, it was immediately obvious to those paying attention that boss Martin Winterkorn would have to resign. Obvious to everyone but Winterkorn and the VW board, that is, who took five days to come to the same conclusion as the rest of the globe.
Winterkorn left his post stating grandly that he was “not aware of any wrongdoing on my part”, while the company statement announcing his departure was a gushing tribute to his career. He made “invaluable” and “towering” contributions, while the carmaker’s rise was “inextricably linked to his name”. And they say Germans don’t have a sense of humour.
A terrible month for the British steel industry as SSI’s loss-making plant at Redcar on Teesside closed after almost 100 years in operation. Further threatened job cuts and mothballing of plants followed at Tata Steel’s sites in Scunthorpe and Scotland.
The UK government was criticised for reacting too slowly to a crisis that has threatened more than 5,000 jobs and left the sector permanently damaged – primarily because of cheap imports from China.
Still, by the end of the year there was, at least, some hope as Tata Steel said it was in talks with Greybull Capital to sell its European long products business to an investment group in a move that could safeguard 4,700 jobs and keep open several British plants threatened with closure.
Hello, is that Slater & Gordon? Your share price appears to have had an accident that was not your fault.
Yes, November proved to be a bad month for the Australian law firm that operates in the UK personal injury claims business, as its stock market value slumped by more than half after George Osborne proposed curbs on claims for whiplash injuries.
Shares in the firm fell 51% to A$0.94 in Sydney straight after November’s spending review. The chancellor said the government would consult on ending the right to cash compensation for minor whiplash injuries. He also outlined plans to slash the legal costs by directing personal injury claims of up to £5,000 to the small claims court.
Whiplash costs insurers £2bn a year. The industry has been campaigning to end what it calls an epidemic of claims.
If Sports Direct chairman Hellawell actually did leave parliament in March thinking the year had then reached a nadir, then he was a tad over-confident.
December saw matters get worse for Sports Direct, when the company appeared to outsource its corporate governance to the Guardian – just as it produced a disappointing set of figures. The shares slumped to two-year lows as an investigation by the Observer’s sister paper revealed – among other things – that temporary workers at the group’s warehouse in Derbyshire were receiving effective hourly rates of pay below the minimum wage.
The result was an astonishing consensus uniting the extremes of the political and business spectrum: Labour was on the same side as the Conservatives; the Institute of Directors was as critical of the company as the union Unite; and hedge fund boss Crispin Odey – who once branded founder Mike Ashley a “genius” – was uttering startlingly similar putdowns to firebrand MP Dennis Skinner.
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