UK supermarket chain Wm Morrison disappointed shareholders at its AGM last week by failing to announce the appointment of a new CEO. However, after a protracted search accompanied by accusations of indecisiveness, the company now appears close to naming its new chief. Joe Ayling reports.
Seven months have past since Bob Stott retired as chief executive of UK supermarket group Wm Morrison, and chairman of the board Sir Ken Morrison – himself in the process of stepping down after more than 40 years in the hot seat – is finally close to announcing the appointment of a new CEO.
Already-frustrated shareholders attended last week’s annual general meeting with great expectations of a definitive answer from 74-year-old Sir Ken, but were once again left disappointed.
Rather than being told the name of the new CEO – on whom they could swiftly pin hopes of a revival in the company’s fortunes, not to mention its share price – shareholders heard Morrison announce that the search for a new chief executive “is now approaching the final stage, and I expect to make a firm announcement within the next two to three weeks”.
However, even though it would have been an excellent investor relations move if Sir Ken had unveiled a new CEO at the AGM, the further delay does not appear to be indicative of yet more procrastination on the part of the retailer. The decision is now genuinely imminent.
Moreover, there is a pretty clear idea who the new boss will be. It seems likely that Heineken executive Marc Bolland will succeed Stott following the reported withdrawal from the fray of Alliance UniChem boss Ian Meakins.
However, while Wal-Mart Germany president David Wild jumped off the UK press rumour-mill as quickly and quietly as he had entered it, he cannot be ruled out completely.
Clive Black, market analyst and head of research at Shore Capital, told just-food: “There are not many positions of this magnitude around, there were a lot of applicants interested and it looks like Morrisons has reached a final crossroads. The shortlist has gone from two or three to being one or two, with Marc Bolland and David Wild left.”
Black is among many in the City who see a pressing need for Morrison to get its new CEO on board. “The vacancy is at a point when it needs to be filled sooner rather than later,” he said.
One piece of news that Sir Ken did have for shareholders, which may have muddied the waters somewhat, was the announcement that he would be delaying his own retirement until 2008. He had been expected to announce his retirement at the AGM but many had assumed he would be stepping down well before 2008.
“I have been chairman of the company since it floated in 1967 but have today informed the board of my current intention to retire as chairman and a director of Morrisons by the end of the next financial year in January 2008. The board has invited me to become life president following my retirement,” Morrison said.
The news that the charismatic chairman plans to stay in office at the UK’s fourth biggest supermarket until 2008, and will continue to be involved after that as life president, is unlikely to have been lost on whoever the successful CEO candidate might be.
But it does appear that Morrison’s influence is on the wane. Although the chairman had expressed his preference for an internal appointment, all three contenders for the CEO post are from outside the company.
There is certainly a heavy preference from shareholders for an outside appointment to help extricate the company from logistical problems arising from the conversion of 220 acquired Safeway stores in November 2005, following the GBP3bn takeover of Safeway last year.
The withdrawal from the race today (30 May) of Meakins, 49, is reportedly borne out of frustration with chairman Morrison’s lack of decisiveness. An insider told The Daily Telegraph: “He doesn’t feel that Sir Ken has been straightforward. First he said he was going to stay for six months, then it was stretched to nine months, then a year. And now it’s 18 months. Ian is a very straight guy and the whole process has become so drawn out.”
Meakins, who will step down from Alliance Unichem after its merger with Boots, joined the group in December 2004 as chief executive, and was previously president of European major markets and global supply at Diageo.
Bolland, 47, who is chief operating officer at Heineken NV and survived a management restructuring at the brewer last year, has been a front-runner from the start because of his proven experience in improving marketing. He became chief operating officer in 2005 after first joining the company in 1987. He is also a board member for Manpower Inc., and chairman of the board for Hotel De L’Europe.
Heineken shares dropped late this morning following reports that Bolland could be resigning, analysts said.
Bolland has emerged from the shadow of Meakins, but there is still competition from David Wild, president of Wal-Mart Germany, who was positioned as favourite by the Observer newspaper on Sunday (28 May). Wild moved to Germany in 2004, as chief merchandising officer, after spending 18 years at the UK’s top retailer Tesco – six as chief executive of Central Europe.
Analysts have indicated that Wild’s more specific retail experience will stand him in good stead, but that a host of other factors could be raised in the boardroom.
The developments mean that one of the external interviewees has been filtered out by the drawn out nature of the selection process itself. The question now is how long it will take the chairman to make a decision between the final two, days or weeks?
“It is regrettable that it has taken so long, there is a vacuum at the moment for Morrisons in terms of making long-term strategic decisions because you need a chief executive in position for these processes,” Clive Black said. “At the same time, Morrisons have to get the right person for the job, who can also form a good working relationship with Sir Ken Morrison.”
When contacted by just-food, the company reiterated its refusal to comment on the appointment for the time being. Of course, it may only take one more withdrawal for Sir Ken’s decision to be virtually made for him, and some of the company’s more exasperated shareholders may be thinking that is the only way a decision will be reached. But it is clear that this extended executive search needs to be concluded as soon as possible, both to calm shareholders’ nerves and give the company much-needed new impetus in the face of some stiff challenges.