The Institute of Directors has expressed concern about the appointment of Michael Dobson, the current CEO of Schroders, as the company’s chairman, in contravention of normal rules of the UK Corporate Governance Code. The board deserved credit for transparently explaining the reasons behind their decision, the IoD said, but this did not remove worries about the independence of the Chairman.
Oliver Parry, Senior Corporate Governance Adviser at the IoD, said:
“Schroders’ decision to appoint Michael Dobson as their next chairman does raise concerns. As they acknowledge themselves, corporate governance rules in the UK clearly state that chief executives should not become company chairs unless in ‘exceptional circumstances’. Although we understand Schroders’ desire for continuity, this should not come at the expense of board independence.
“There are good reasons CEOs should not become chairs. The chair's role is to lead the board in holding the executive team to account, without interfering in the day-to-day operational management. Schroders say that Dobson will still be involved in dealing with ‘major clients…commercial partners and regulators’, which does seem to blur the boundaries between executive and non-executive responsibilities.
“It must be acknowledged that Mr. Dobson has played a key role in Schroders’ recent success, and the firm should be commended for taking a long-term approach. But strong performance is no excuse for ignoring the corporate governance rules without a very convincing explanation.”