The asset manager, founded in 1804, said Michael Dobson would step down as chief executive on 4 April, after more than 14 years with the company. He will be replaced by the head of investment, Peter Harrison, and will move upstairs to take over as non-executive chairman from Andrew Beeson.
The move contravenes recommendations in the corporate governance code, the regulatory framework that Schroders is more used to defending as a powerful investment institution.
“A chief executive should not go on to be chairman of the same company,” according to the code, overseen by the Financial Reporting Council. “If exceptionally a board decides that a chief executive should become chairman, the board should consult major shareholders in advance and should set out its reasons to shareholders at the time of the appointment and in the next annual report.”
The code is not mandatory but operates on a “comply or explain” model, meaning that firms must give their reasons if they breach its guidelines.
Its recommendation that chief executives do not become chairman are intended to ensure that the chairman’s views are sufficiently independent from those of the rest of the board. Schroders said it was “mindful” of the code’s provisions but Dobson had been the “unanimous” choice of the board.
The firm published an open letter from its senior independent director, Philip Howard, explaining its position to investors. “It is clear to the board that Michael Dobson is the outstanding candidate for the role,” said Howard.
He said the firm recognised that “ordinarily”, the code guides against a succession plan like the one announced by Schroders. But he said major shareholders had been consulted and given their “strong support”.
It added that it was unlikely to pursue a similar succession plan in future: “The board does not regard this appointment as seeing a precedent at Schroders and the separation of the roles of chairman and chief executive remains in place.”
Dobson, who will earn £625,000 a year and will not get a fee for giving up the chief executive role, will seek new non-executive directors to strengthen the firm’s governance.
The company hailed Dobson’s achievements, pointing to his role in leading Schroders from 2001, when it made a loss, to record profits in 2015 of more than £600m.
Schroders announced its succession plan alongside annual results that showed an 8% increase in pre-tax profit to £609.7m in the year to the end of 2015. The firm has £313.5bn of assets under management, up from £300bn in 2014, an increase that saw it overtake Aberdeen Asset Management as the UK’s biggest listed fund manager.
Annual dividends will be 87p per share, an improvement on the 78p that investors were handed in 2014.
This article was written by Rob Davies, for theguardian.com on Thursday 3rd March 2016 12.41 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010