L&G succession planning misses the mark
The author is a Reuters Breakingviews columnist. The opinions expressed are their own.
LONDON, Jan 30 (Reuters Breakingviews) -Chief executives always like to see their company’s share price dip when they announce their departure. As such, the 3% drop in Legal & General’s LGEN.L share price is a compliment to Nigel Wilson’s stewardship over a decade in which investors in the $19 billion UK insurer enjoyed a comfortable ride. But it might also express mild discontent with the board’s succession planning.
Wilson, a 14-year veteran of L&G, extended the group into housebuilding and was a vocal advocate of regulatory changes to free up investments in riskier assets such as infrastructure. But he also delivered on the basics. Under his tenure, the London-listed insurer made a 270% total shareholder return, less than European peers like Allianz ALVG.DE and Axa AXAF.PA but outperforming UK rivals such as Aviva AV.L.
Even so, the smoothest way to sign off on Wilson’s tenure would have been to announce his successor now, rather than the news it might take up to a year to find one. After all, the L&G board had long enough to identify a suitable internal candidate. Chairman John Kingman’s reticence may reflect a preference for a big-hitting external candidate to grow the company beyond UK borders. Fine, but the upshot is L&G investors face an unfamiliar period of uncertainty. (By Pamela Barbaglia)
Follow @Breakingviews on Twitter
Capital Calls - More concise insights on global finance:
New Gucci designer has big sneakers to fill nL4N34F3A2
Unilever’s new boss whets appetite for split nL4N34F335
America’s hazy chip deal fogs market signals nL4N34F0GF
Artificial intelligence out-buzzes the blockchain nL1N34C1EI
Rolls-Royce alarm is justified, if oddly expressed nL4N34C1T6
Editing by George Hay and Oliver Taslic
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.