EMAG

The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

Search
Media Stories: 11/12/2005 - The bullet that Treeves must bite

JEFF PRESTRIDGE in The Mail on Sunday

The bullet that Treeves must bite

11 December 2005

http://www.thisismoney.co.uk/news/columnists/article.html?in_article_id=405645&in_page_id=19&in_author_id=3

AFTER the embarrassing climbdown by Equitable Life over its 3.7bn legal battle with former auditor Ernst & Young and 15 former directors, it is surely time for the board to review the position of chief executive Charles Thomson as a matter of urgency.

In the wake of Equitable's climbdown, which has landed policyholders with a 45m legal bill, Financial Mail reported last Sunday on widespread disquiet at its London headquarters over the way Thomson runs the beleaguered mutual.

Apart from querying Thomson's commitment to the Equitable cause - especially as he regularly works a short week so he can get back to Ayr to be with his former secretary and their baby - there are also questions about his autocratic rule and whether he is worth his 1m-a-year package.

Chairman Vanni Treves claims that the decision to pursue Ernst & Young and the former directors was a unanimous board decision so no individual's head ought to roll for the ensuing debacle. But he should at least now keep Thomson under close surveillance.

Since joining the board in 2001, Thomson has seen a string of executive directors come and go, including Charles Bellringer (appointed May 1, 2002, resigned November 25, 2002) and Nigel Brinn (appointed February 20, 2003, resigned August 1, 2004).

The result is that Thomson has been able to rule the roost at Equitable on a day-to-day basis for long periods without any significant challenge from a fellow executive director. Indeed, since August 2004, the board of eight non-executive directors and Thomson has not bothered to find a replacement for Brinn, the former finance and investment director. This has left Thomson to run the business unopposed and unchecked.

Good corporate governance does not expressly state anything about the number of executive directors that an organisation should have. But it is certainly exceptional for a mutual the size of Equitable to have only one executive in charge. To put Equitable's unusual boardroom composition into perspective, Nationwide building society has eight non-executives and five executives while the Standard Life board consists of nine non-executives and three executives. These mutuals' boards, unlike Equitable's, clearly have a balance between executives and non-executives.

In Equitable's latest report and accounts, Treves alludes to the fact that he writes and lectures extensively on corporate governance.

Treves should put into practice what he preaches by insisting that Equitable appoints at least one other executive director to provide much-needed balance in the boardroom and shorten the reins on Thomson.

Equitable's long suffering policyholders, all 750,000 of them, deserve nothing less.