Salz Review - Wall Street Journal

Salz Review
An Independent Review of Barclays’ Business Practices
112
9.57 Some boards treat succession planning, including the development of potential
leaders, more systematically than was apparent in the two Barclays cases we looked
at. For example, they will see reports on a significant number of senior managers and
devote more time to a discussion of a number of managers with top-level potential.
“Assessment reports are like finance reports, providing granularity about
performance, what has been achieved and how. Information can be gleaned about
personality preferences (likes to do), ability (can do), behaviour (how it is done),
motivation (will do) and red flags (de-railers).” 184
Recommendation 11: Group Chief Executive succession
The Board should agree periodically the criteria and personal characteristics
required for the role of Group Chief Executive as part of its succession
planning. The framework for succession planning should include the long-term
development of future leaders, Board exposure to potential internal candidates,
thorough consideration of external candidates and assessment of alignment
with Barclays’ culture and values.
Operation of Subsidiary Boards
9.58 We have considered formalising non-executive participation (drawn from existing
Barclays’ non-executive directors or others) on some subsidiary boards or on key
governance, risk and audit committees covering geographies or businesses.
Historically, many banks have done this only where laws or regulators require it and
the corporate structure makes it appropriate. From a governance viewpoint, there are
advantages and disadvantages in such an approach, as well as legal considerations
around the responsibilities of directors. Significant advantages of adding nonexecutives
who are not on the Group Board to a subsidiary board (such as one
designed to cover the investment bank) would be to share some of the workload and
to give a more specific non-executive focus to a complex part of the Group.
The assumption would be that the workload at Group level would be reduced by a
degree of reliance on the subsidiary level oversight. If the structure achieved better
understanding of a complex area, improved oversight would be achieved overall.
On the other hand, it may be difficult for Group non-executives, having regard to
their own responsibilities, not to duplicate much of the work done at subsidiary
board level especially if, as would be likely, the subsidiary represented an important
part of the business and there was a risk of issues falling between the two. And issues
such as culture, standards and values are Group issues that require an understanding
of the behaviours across the whole Group. For example, the Barclays Wealth
business is a relatively small part of the Group taken as a whole but is nevertheless
significant to Barclays’ reputation. And there would need to be occasions when all
the non-executives met together – not least to assure some consistency of approach.
At present where such boards and board committees exist at subsidiary level, for
example in South Africa, there is insufficient linkage with Barclays Board nonexecutives,
although there are arrangements for issues to be raised to Group level
through management reporting lines.
184 Sir David Walker, A Review of Corporate Governance in UK Banks, p. 141.