Was Bob Diamond really irreplaceable? Barclays’ board operated for 15 years on the assumption that he was. As a result, the UK bank’s chief executive became more powerful – and ever harder to replace. Now that he has been kicked out in the wake of the Libor rate-rigging scandal, Barclays is struggling to find new leadership.
This is an object lesson for all companies, not just banks. Think of two other UK-listed groups which have recently provoked shareholder anger over their bosses’ high pay packages: WPP, the advertising giant; and miner Xstrata. In both cases, the boards paid their chief executives so much because they thought they were indispensable.
Barclays is now in a mess. Not only has Diamond quit, his chairman, Marcus Agius, has also said he will resign. Both men ultimately had to go: Diamond had come to epitomise the worst of the City of London’s greed, while Agius seemed unable to hold his chief executive in check. Neither man responded to requests for comment.
The manner of their going means the bank is now rudderless at a time when a political storm is swirling around it and a financial crisis is bubbling across the English Channel.
It will be hard to find a good candidate to replace Diamond, given that Barclays has now become a political football and the next boss will have to put up with intense media scrutiny. Attracting a good chairman won’t be easy either, although the deputy chairman, Michael Rake, seems prepared to step into the breach.