HSBC: HSBC's search for a new chairman is proceeding by process of elimination. Chief executive Michael Geoghegan has threatened to leave unless named as replacement for outgoing Stephen Green, according to the Financial Times. Even if this dramatic tale is false, it probably reduces his chances of taking the top spot. And if Geoghegan really won't serve under a new chairman, he will have to go.
Geoghegan was never an ideal candidate for chairman. While HSBC has a history of shunting its CEOs upstairs, some investors said Green should be the last to make the switch when he took the chair in 2006. CEOs-turned-chairmen can find it hard to give their successors sufficient breathing space. Over time, a lack of fresh air in the boardroom can stifle innovative thinking.
If Geoghegan really has threatened to quit, it is now impossible to appoint him. Either way, the lack of a stiff denial from HSBC rather ties the board's hands. Geoghegan's fellow directors would look like they were feebly caving in to his demands. Good governance calls for a chairman to support the CEO while representing shareholder interests, which makes domineering types ill-suited to the job.
Putting Geoghegan in the chair might have made more sense when this was an executive role. But during his tenure as CEO, most strategic decisions have been returned to his office. Green, meanwhile, has focused on schmoozing regulators. By moving upstairs, Geoghegan would have to hand over strategy to his successor and take on an elder statesman’s mandate for which he has little obvious experience.
The situation is embarrassing, but it’s not a crisis. HSBC has options for the chairman’s role, and for the CEO’s. Several non-executives look like suitable chairmen, including senior independent director Simon Robertson and former Goldman Sachs president John Thornton. Candidates for CEO include investment bank boss Stuart Gulliver and finance director Douglas Flint. The bank also has time: Green starts his new job as UK trade minister in January.
HSBC shouldn’t fear appointing the right person as chairman - preferably an outsider - even if that means replacing a chief executive along the way.