Magazine article Management Today

Bosses Who Want It All

Magazine article Management Today

Bosses Who Want It All

Article excerpt

A founder wanting to buy out shareholders makes them all the keener to hold on.

Lord Kirkham and Tony Pidgley come over as self-made men and proud of it. Through their own labours, they have built thriving businesses and made themselves multi-millionaires.

They have also made lots of money for their shareholders. Now, it seems, this has begun to rankle with them. Why work for shareholders when they could be working for themselves?

Both men decided they would like to buy back from investors the businesses they had started, the furniture chain DFS for Kirkham and house-builder Berkeley for Pidgley. Their motives may not have been entirely pecuniary.

The demands made on public companies are now so onerous that many a CEO wonders whether retreat into the unquoted arena might be preferable.

Dealing with the latest corporate governance commands while trying to satisfy the whims of short-term investors can be tiresome and time-consuming. Men such as Kirkham and Pidgley would rather be left to get on with running the business.

The financial motive is rarely completely absent, however, from the decisions of those who started with nothing and achieved great wealth. When he realised that investors might not be persuaded to sell to him, Pidgley was prepared to settle for an alternative arrangement that simply offered him the opportunity to make a great deal of money.

He had not been working for a pittance. In August last year there was surprise when his total package swelled to pounds 4.7 million, thanks to his retrospective inclusion in a long-term incentive plan. But Pidgley, who famously spent his early years living with his adoptive gipsy parents in a disused railway carriage, wants more.

When he unveiled his imaginative scheme and asked shareholders to bless a deal that could deliver him pounds 36 million, the reaction resembled that which greeted Oliver Twist's request for a second helping. Yet investors realised that if Pidgley did well from the deal, it would be because he had generated impressive returns for the company. A demotivated, sulky Pidgley would not be in shareholders' best interests.

Kirkham left investors in little doubt that he was feeling pretty disaffected with life at a publicly quoted DFS and would be even more fed-up if they rebuffed his attempt to buy back the company. The non-executive directors spelt out their qualms about his likely commitment to the business if he did not get his way. There were even veiled suggestions that he might be tempted to set up a new venture in direct competition with DFS. …

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