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| Bell Pottinger is a textbook example of how not to manage a crisis | Bell Pottinger is a textbook example of how not to manage a crisis |
| (4 days later) | |
| Bell Pottinger, in its handling of its own public relations disaster in South Africa, has provided a textbook example of how not to manage a crisis. | Bell Pottinger, in its handling of its own public relations disaster in South Africa, has provided a textbook example of how not to manage a crisis. |
| At first the City PR outfit denied it had done anything wrong in its work for the Gupta family. When the facts suggested otherwise, and that Bell Pottinger had been running a poisonous campaign based on stoking racial division, the company fired a mid-ranking partner. When an “unequivocal and absolute” apology arrived, its force was undermined as departed founder Lord Bell and chief executive James Henderson squabbled over who was to blame. | At first the City PR outfit denied it had done anything wrong in its work for the Gupta family. When the facts suggested otherwise, and that Bell Pottinger had been running a poisonous campaign based on stoking racial division, the company fired a mid-ranking partner. When an “unequivocal and absolute” apology arrived, its force was undermined as departed founder Lord Bell and chief executive James Henderson squabbled over who was to blame. |
| When Henderson finally resigned at the weekend, any sense of honour evaporated when it became clear that his position was about to become impossible. As we now know, the review by law firm Herbert Smith Freehills was damning and the trade body, the Public Relations and Communications Association, concluded that Bell Pottinger’s behaviour was so bad that expulsion was the only suitable penalty. | When Henderson finally resigned at the weekend, any sense of honour evaporated when it became clear that his position was about to become impossible. As we now know, the review by law firm Herbert Smith Freehills was damning and the trade body, the Public Relations and Communications Association, concluded that Bell Pottinger’s behaviour was so bad that expulsion was the only suitable penalty. |
| This is now, obviously, a corporate crisis for Bell Pottinger. It is in the reputation-enhancing game and, if can’t even protect its own name, its services don’t look so valuable. It is also astonishing that the senior management, including Henderson, the biggest shareholder, appear to have been asleep to the risks in a contract that, at more than £1m a year, will have been one of the biggest on the books. | This is now, obviously, a corporate crisis for Bell Pottinger. It is in the reputation-enhancing game and, if can’t even protect its own name, its services don’t look so valuable. It is also astonishing that the senior management, including Henderson, the biggest shareholder, appear to have been asleep to the risks in a contract that, at more than £1m a year, will have been one of the biggest on the books. |
| It is also a crisis for the wider City PR industry, a club in constant pursuit of respectability. Its top folk these days like to think of themselves of professionals with ethical codes of conduct, rather than chancers who will do or say anything if the money is right. Bell Pottinger’s dirty campaign in South Africa represents a serious threat to that self-image. | It is also a crisis for the wider City PR industry, a club in constant pursuit of respectability. Its top folk these days like to think of themselves of professionals with ethical codes of conduct, rather than chancers who will do or say anything if the money is right. Bell Pottinger’s dirty campaign in South Africa represents a serious threat to that self-image. |
| The PRCA has therefore done the right thing in expelling Bell Pottinger. If the outfit had been allowed to remain in the trade body, all those fine words about professional standards would have been seen as worthless. The sanction makes Bell Pottinger’s business prospects substantially bleaker but that, presumably, is the point. Sometimes ugly spin has to be seen to catch up with the spinner. | The PRCA has therefore done the right thing in expelling Bell Pottinger. If the outfit had been allowed to remain in the trade body, all those fine words about professional standards would have been seen as worthless. The sanction makes Bell Pottinger’s business prospects substantially bleaker but that, presumably, is the point. Sometimes ugly spin has to be seen to catch up with the spinner. |
| Sports Direct investors can dump chairman – but it will change little | Sports Direct investors can dump chairman – but it will change little |
| What would follow if Sports Direct’s independent shareholders vote to dump Keith Hellawell as chairman at Wednesday’s annual meeting? | What would follow if Sports Direct’s independent shareholders vote to dump Keith Hellawell as chairman at Wednesday’s annual meeting? |
| Such an event at a FTSE 250 company is so rare that precedents are few, and probably unreliable in this case because Sports Direct, with founder and chief executive Mike Ashley owning 60%, runs to its own script. Here’s a speculative theory. Ashley might say good riddance to good governance and instal himself as executive chairman. | Such an event at a FTSE 250 company is so rare that precedents are few, and probably unreliable in this case because Sports Direct, with founder and chief executive Mike Ashley owning 60%, runs to its own script. Here’s a speculative theory. Ashley might say good riddance to good governance and instal himself as executive chairman. |
| Hellawell’s downfall is far from assured, it should be said. On one hand, the main proxy voting agencies have recommended that he should pay the price for the company’s many governance failings and slow pace of reform. On the other, some of the leading investor rebels of past years, such as Standard Life, have cut the size of their stakes. | Hellawell’s downfall is far from assured, it should be said. On one hand, the main proxy voting agencies have recommended that he should pay the price for the company’s many governance failings and slow pace of reform. On the other, some of the leading investor rebels of past years, such as Standard Life, have cut the size of their stakes. |
| The only certainty is that outsiders’ views matter this time. Last September’s 54% rebellion against Hellawell was rendered redundant when Ashley rolled out his shares in a binding vote in January to save his loyal ally. Ashley even said then that he’d asked the former policeman to reconsider his pledge to quit if independent shareholders deliver a third thumbs-down this week. That sweet-talking has plainly failed. The notice of this year’s meeting states clearly that Hellawell will go “with immediate effect” if he can’t win a majority among independents. | The only certainty is that outsiders’ views matter this time. Last September’s 54% rebellion against Hellawell was rendered redundant when Ashley rolled out his shares in a binding vote in January to save his loyal ally. Ashley even said then that he’d asked the former policeman to reconsider his pledge to quit if independent shareholders deliver a third thumbs-down this week. That sweet-talking has plainly failed. The notice of this year’s meeting states clearly that Hellawell will go “with immediate effect” if he can’t win a majority among independents. |
| So who would chair Sports Direct? The least likely outcome – surely – is that Ashley would bow to the demand for an experienced and independent outsider to be appointed. It would be tricky to find a credible volunteer anyway. More to the point, peace-making conciliation is not Ashley’s style. If outside shareholders deliver an “up yours” to his chairman, he may reply in kind. If doesn’t assume the role himself, he could always shuffle another boardroom loyalist, such as Simon Bentley, into the job. | So who would chair Sports Direct? The least likely outcome – surely – is that Ashley would bow to the demand for an experienced and independent outsider to be appointed. It would be tricky to find a credible volunteer anyway. More to the point, peace-making conciliation is not Ashley’s style. If outside shareholders deliver an “up yours” to his chairman, he may reply in kind. If doesn’t assume the role himself, he could always shuffle another boardroom loyalist, such as Simon Bentley, into the job. |
| That thought should not deter the rebels. If they agree with voting agency Glass Lewis that Hellawell is “beholden to Mr Ashley and as such, acts as an ineffective counterweight” their only reasonable course is to vote to get rid of him. But the alternative to the ineffectual and hapless Hellawell may be even tighter control of the boardroom for Ashley. The man himself is not even bothering to attend Wednesday’s meeting, with rather suggests he doesn’t care what other shareholders think. | That thought should not deter the rebels. If they agree with voting agency Glass Lewis that Hellawell is “beholden to Mr Ashley and as such, acts as an ineffective counterweight” their only reasonable course is to vote to get rid of him. But the alternative to the ineffectual and hapless Hellawell may be even tighter control of the boardroom for Ashley. The man himself is not even bothering to attend Wednesday’s meeting, with rather suggests he doesn’t care what other shareholders think. |