Norman Broadbent and BDO: Retail leads in diversity

11 December 2014 Consultancy.uk

Retail is leading the way when it comes to getting women in executive roles, a new research by BDO shows. In this industry sector, women make up a quarter of the Non-Executive Director boards in the FTSE 100 and FTSE 250, which is double the average of all industry sectors, in addition to this, the number of Executive Directors in Retail is also 2% higher than the industries’ average.

Norman Broadbent, a board executive search firm, together with consulting firm BDO and not-for-profit organisation Quoted Companies Alliance, recently released a new research into the board composition and diversity of over 1,700 quoted companies including those within the FTSE 100 and FTSE 250. “The composition of a management team in terms of size, age, gender and tenure is a critical determinant of its performance, so it should be a priority for companies to regularly review their makeup,” comments Scott Knight, Partner at BDO.

The research states that although women are still underrepresented at the executive level*, Non-Executive Director (NED) boards in the FTSE 100 and FTSE 250 have made huge progress in increasing gender diversity. More than one-third of appointed NEDs in the past three years in FTSE 100 were women, increasing the number to 27%, and in FTSE 250 women accounted for 34% of the appointments, bringing the number to 21.8%. The number of women in Executive Directors boards is significantly lower, with the highest proportion of 7.6% in the FTSE 100, although this is also an increase from the 5.6% in 2010.

Norman Broadbent, BDO and Quoted Companies Alliance research board diversity

The research shows clear differences between industry sectors when it comes to boardroom composition. Retail is leading the pack with the highest female representation in both NED and Executive Directors boards. Just over a quarter (25.8%) of NEDs in the Retail sector are female, which is double the average of all sectors and of the Retail Executive Directors 8.2% are female, compared to the 6.2% average. “The retail sector’s gender diversity record is impressive. It has the highest share of female non-executive directors amongst all industries surveyed. Boards should have the appropriate balance of skills, experience, independence and knowledge, and diversity is a key component of, not only good corporate governance, but of successful businesses,” explains Sue O’Brien, Chief Executive at Norman Broadbent. “Fast moving sectors, such as retail, appear to have embraced this, with non-executives bringing more current experience which provides the fresh thinking that this sector needs. However, there is much more work to be done.”

* Gender diversity is a hot issue and has also recently been investigated by Oliver Wyman. The firm released a research into diversity at the CEO and Executive Committee (ExCo) level in the financial services industry, and found that in 2013 only 4% of CEOs and 13% of ExCo members were female.

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Debenhams administrator handed legal threat from Sports Direct

24 April 2019 Consultancy.uk

Earlier in April 2019, the long-suffering high street entity of Debenhams finally collapsed into a pre-pack administration, wiping out equity for shareholders including Sports Direct. Now, Mike Ashley, the controversial owner of Sports Direct, has threatened legal action to remove FTI Consulting from its role as Debenhams’ administrators, following the obliteration of his stock in the company.

As the retail sector in the UK continues to endure a torrid period, British retail stalwart Debenhams endured a spectacular fall from grace. The high street ever-present was founded in the early 19th century, with a single store in London, before expanding to 178 locations across the UK, Ireland and Denmark. However, following a string of profit warnings and several rounds of lay-offs, the company engaged advisors from Big Four firm KPMG to consider its options in the Autumn of 2018.

At the time, Debenhams Chairman Sir Ian Cheshire insisted that the chain was not heading for insolvency, or that it was actively embarking on a company voluntary agreement (CVA). Nevertheless, Debenhams fell into administration in Spring 2019. The news saw Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting appointed as joint administrators, immediately selling the retailer to a newly incorporated company controlled by secured lenders.

Debenhams administrator handed legal threat from Sports Direct

The pre-pack administration deal meant Debenhams was able to access significant additional funding, preserving 165 of its stores, though plans to close around 50 under-performing stores in the next three to five years remain in place. At the same time, the deal maintained its commercial relationships with suppliers, employees and pension holders. However, it also effectively led all of Debenhams’ previous shareholders – including the retail magnate Mike Ashley – to lose their equity.

Ashley’s Sports Direct firm had increased its stake in the department store chain in 2018, but stopped just short of the 30% stake which would require it to put in a formal offer to fully acquire the business. The transaction fuelled speculation that Ashley was waiting for the opportune time to acquire Debenhams, particularly in the wake of his swoop for House of Fraser. Ashley’s deal there enabled Sports Direct to buy the firm out of administration in a pre-pack deal, allowing the new ownership to controversially wash its hands of the company’s pension scheme in the process.

While some believed this was Ashley’s intent for Debenhams, FTI’s decision to sell the store to its creditors has instead resulted in a sizeable loss for Ashley. The hit of around £150 million from his loss in Debenhams comes after an analysis by The Sunday Telegraph suggested the tycoon had accrued “a sprawling web of stakes” in rival companies, and that he may be nursing losses of more than £500 million.

Bad press

Ashley – who recently lost a complaint ruling by British press regulator Ipso allowing the Times to note that he shared many characteristics with North Korean dictator Kim Jong-un – has been outspoken in his contempt for FTI since the news broke of Debenhams’ sale. The Sports Direct CEO has called for the resignation of FTI from its role as administrator, after his stake in the department store chain was wiped out. The Guardian stated that a letter to FTI saw Sports Direct’s lawyers even threaten legal action to remove the advisory firm as administrators because of a conflict of interests.

According to the reports, the document claimed, “[Sports Direct] will do everything available to it to unwind the damage caused to the company and other stakeholders (including large and small shareholders) by the events of today including but not limited to challenging the appointment [of FTI as administrators] and all consequences of it.”

The letter allegedly claims that FTI had been involved with Debenhams since the second week of February, and had engaged with the group’s lenders. The legal team reportedly suggested that this would consistute a conflict of interest, because FTI sold the retailer’s operating companies to the same lenders via a pre-pack administration.

This comes weeks after Sports Direct was itself accused of becoming overly cosy with a professional services firm, which has seen its auditor Grant Thornton placed under scrutiny for its continued role with the firm. In 2018, it was reported that Grant Thornton was set to stand aside from the role due to competition rules. It had held the role since before Sports Direct floated on the London Stock Exchange in 2007, while Phil Westerman, the Partner at Grant Thornton responsible for signing off Sports Direct's accounts, had himself undertaken the work for five years. 

Neither situation is understood to have changed, leading to the questioning of the independence of Grant Thornton’s auditing work with Sports Direct. Such is the level of bad press surrounding the retailer, that the Big Four of the accounting and advisory world – wary of incurring a new scandal of their own – are said to have ruled out taking the contract over.