Schroders ignites ‘fast and loose’ governance concerns

A Schroder family member with little City experience could be appointed to the board.

A Schroder family member with little City experience could be appointed to the board.

Schroders could take a reputational hit in the court of public opinion as family succession at the firm is reportedly set to see a family member with little City experience appointed to the board.

The FTSE 100 listed manager is contemplating installing Bruno Schroder’s daughter Leonie Fane, The Times reported on Friday.

According to Companies House, Fane’s directorship experience is dominated by family activities and charities, including the Red Squirrel Survival Trust.

Shiv Taneja, founder of UK Fund Boards, said the appointment could go down badly with the corporate governance community, which has already had problems with Schroders in the past.

“I think in the court of public governance opinion, they play fast and loose and that’s not good given until very recently they were the largest European asset management company.”

Schroders corporate governance

Schroders has been frequently criticised for its board composition.

The investment manager ruffled feathers in April 2016 when it proposed installing former CEO Michael Dobson as chairman of the board.

The Hermes EOS team lambasted the move as “a breach of a fundamental principle of UK corporate governance and best practice” at the time. Dobson’s appointment was approved in the end.

Schroders said it would not be drawn on Fane’s rumoured appointment. It said: “As a publicly listed company there is a process that the board is required to follow if there are any changes to be made.”

“It isn’t great corporate governance,” said Ben Yearsley director at Shore Financial Planning. However he said the family’s stake in the business meant they were entitled to make board appointments.

The Schroders family owns 48% of the firm.

Schroder, now 85, has served on the board since January 1963. He is the great-great grandson of Schroders co-founder John Henry Schroder who started the business in 1804.

Lack of financial services experience

Taneja said he wouldn’t go so far as to welcome Fane’s appointment, but said City boards should be more diverse and include executives with experience in other sectors.

Yearsley said it was important non-executive directors have a degree of experience.

“You go back to the financial crisis and there were instances with some of the banks where some NEDs were clearly out of their depth,” he said.

Board independence

Jason Hollands managing director at Tilney said the relevant point is that the majority of directors are independent. Two members of the Schroders family, including Fane’s father, make up the company’s two non-executive directors. There are five independent directors on the board currently, not including senior independent director Ian King.

– This article first appeared on ESG Clarity‘s sister site, Portfolio Adviser.