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Two of the hottest seats in the UK boardroom were filled this week. Pascal Soriot, vet-turned-Roche-executive, was named the new boss at AstraZeneca; while Antony Jenkins, the only credible internal candidate for the top job at Barclays, was anointed on Thursday.
In choosing Mr Soriot, AZ passed over the obvious internal candidate in the form of Simon Lowth, chief financial officer and interim chief executive of the troubled big pharma group, preferring someone distanced from the regime of David Brennan, who took early retirement in the face of shareholder frustration over strategy.
At Barclays, the Libor-rigging scandal and associated £290m fines similarly created pressure to look outside the bank. A generally blameless career in retail and business banking was enough to make Mr Jenkins the replacement for Bob Diamond, whose investment bank had come to epitomise the unacceptable excesses of Bankerworld.
Both insider and outsider are intended to act as new brooms. Each has a lot of sweeping to do. For Mr Soriot, the task is to set a coherent course for AZ.
The group is facing a patent cliff crisis, with around half of its annual $33bn of revenues set to disappear by 2016 as drug patents expire. So far, it has faced this prospect with a mix of cost-cutting, share buybacks and modest acquisitions. This approach will not work with investors as the cliff-edge approaches. Mr Soriot must decide whether to return cash to shareholders or to spend more vigorously on buying the growth that the group’s drugs pipeline cannot deliver.
Mr Soriot is likely to displease some investors whichever course he chooses. Mr Jenkins may end up pleasing no one. As well as dealing with the various inquiries into what Barclays has done wrong, he must restore the group’s reputation and improve its culture. Such nebulous targets may seem welcome because they are harder to miss. Yet the real-life downside is that their very vagueness can make it difficult to capture success.
Moreover, Mr Jenkins’ lack of experience in Barclays’ investment bank – which dominates the group – is both a qualification for the job and a disadvantage. It is ominous that Barclays is already drawing attention to the investment banking credentials of its new chairman, Sir David Walker. A chairman’s knowledge is no substitute for expertise on the part of the chief executive.
Mr Soriot’s task at AZ certainly looks clearer than Mr Jenkins’. He also has a relative advantage in the likely response of shareholders. Both groups are trading at discounts to peers but over the past five years total shareholder return for AZ investors has been about 60 per cent, while the value of Barclays shareholders’ investments over the same period have shrunk by a similar percentage.
Gratitude is not invariably a feature of investor behaviour. But value creation rather than destruction is at least a more promising backdrop for a group seeking a fresh start.