Salz Review - Wall Street Journal

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Salz Review
An Independent Review of Barclays’ Business Practices
but also of the candidates’ abilities to function effectively in the bank’s governance
system, to develop a relationship with the Chairman and non-executives, and to lead
the senior executive team cohesively. It is also crucial that the Board assesses
personal compatibility with, and ability to demonstrate, Barclays’ values. On the basis
that no candidate meets every criterion fully, the Board should also identify how it
would handle particular shortcomings to avoid potential adverse impact. Once an
appointment has been made, the Chairman, with help from the Board, should
regularly re-evaluate how the assessments are working out and be prepared to take
action to adjust the approach. An open working relationship between the Chairman
and Chief Executive is particularly important in ensuring that the arrangements are
properly put into effect.
9.54 We have considered only the Group Chief Executive appointments of John Varley
in 2004 and Bob Diamond in 2010. The process that led to the appointment of John
Varley was lengthy, involved a total of five internal candidates and attracted publicity
that heightened its significance for all concerned. Interviewees told us that this
caused unfortunate rivalries. There was little attempt to consider external candidates.
When it came to choosing John Varley’s successor in 2010, the memories of the
earlier process may have contributed to a desire to take an approach that was less
drawn-out and less public. Again there seemed not to be an extensive consideration
of external candidates. This was apparently a conscious decision based on the
particular circumstances, including the need for secrecy, and Board views as to the
strength of the internal candidate.
9.55 It is clear that the Barclays Board took its responsibilities for the 2010 selection
process seriously and diligently. It seems that considerable weight was given, in
identifying the ideal successor, to the size of the investment bank and the consequent
need for a candidate with the competencies to manage it. This may have led quite
quickly to the Board deciding that Bob Diamond was the best internal candidate.
When the focus turned to weighing him against a short list of external candidates,
it was decided that only one should be interviewed. We feel that more time should
have been invested in considering external candidates but accept that the Board gave
consideration to this. In our view, establishing the criteria at an earlier stage
(including, after the Lehman acquisition, the need for investment banking credibility)
would have allowed greater opportunity for the Board to broaden the experience of
leaders and identify high-quality external candidates. Nevertheless, Bob Diamond’s
considerable success in building the investment bank clearly made him a very
credible candidate.
9.56 With hindsight, in particular the public response to the LIBOR announcement and
the resignations that followed, it is possible that too much weight was given to Bob
Diamond’s considerable achievements in building a leading investment bank (as well
as BGI) and not enough to the different challenges of leading a UK institution such
as Barclays, with an important retail customer base, and in an environment of low
public trust and enhanced scrutiny. It is doubtful, also, whether at the time the Board
had focused on the scale of the task to achieve the cultural change that is now
identified as needed.