On the money with Gavin Hinks

When the Association of British Insurers berated Stuart Rose at Marks & Spencer for taking on the CEO and chairman’s role, it was made possible because of one man ­- Sir Derek Higgs

Sir Derek, who passed away suddenly last week, was the man who wrote the Higgs Report on non-executive directors in the wake of the Enron and WorldCom corporate collapses. The key report recommended CEOs should not go on to become chairman at the same company. Chairmen should, in fact, meet a critical criteria for independence.

And what a weapon that has become in the hands of activist shareholders and corporate governance champions.

Oddly, it was the self same definition of independence that got Rose in trouble over his investment in Lucky Voice, owned by Martha Lane-Fox, who happens to be a non-exec on M&S’s audit and remuneration committees.

Oh dear. Cynics in the City therefore have a lot to be grumpy about when it comes to Sir Derek. Well, no. An accountant who qualified with Price Waterhouse, and went on to become a very successful investment banker, Sir Derek remained well respected and spoken of in respectful tones.

At the time a senior Big Four partner told me that the non-exec job had been touted round the City but nobody wanted to take it on. In fact it was viewed as something of a poisoned chalice ­ - but the ostracism that was foreseen for Sir Derek, never did take place. The report was viewed as balanced, fair and making significant strides to drag the system of non-execs away from the old boy network and into the modern era.

It was precisely because of Sir Derek’s reputation that it was taken so seriously. So, next time there’s a beating in the press for someone over their corporate governance remember, Sir Derek helped make it possible.

Gavin Hinks is editor of Accountancy Age