Celebrity non-executives: What is the benefit of hiring a famous director?

JJB Sports has an Olympic rower, and Sainsbury’s and N Brown have both appointed a retired newsreader as a non-executive on their boards.

These unusual appointments might generate some column inches and a picture opportunity in the City pages of the press, but what is the benefit of appointing someone so high profile, and how much involvement can a non-executive without a retail background - and sometimes any business experience at all - really have in a company?

Anna Ford joined N Brown Group’s board as a non-executive director last year, having already been a non-executive director at Sainsbury’s since May 2006. Since then, two similarly noteworthy appointments have been made: Matthew Pinsent at JJB Sports, and ex-drug tsar, police chief and miner Keith Hellawell as the non-executive chairman of Sports Direct. But despite the high profile of these appointments, none of these non-executives would talk about what they bring to the retailers they work for, and the companies declined to discuss why they were appointed.

Peter Wallis is best known as Peter York, author of the Sloane Ranger Handbook and former style editor of Harpers & Queen. Yet in what might seem a far from obvious non-executive role, under his real name he has served as a director first of MFI and then of Galiform, where he continues on the board to this day.

He is positive with regards to having someone with a different background on your board, but says that the company must be prepared to brief them properly and ease them into the role.

He believes that someone with experience outside of traditional business can have a moderating influence on a board. “Most boards contain a banker, accountant or lawyer, plus someone with deep and direct experience of that sector. Then you say: ‘What else do you need to make sure that you don’t have too many with the same mindset?’”

Wallis was headhunted to MFI as a non-executive director. Though he has a strong business pedigree through his work as a management consultant - for retailers among others - his writing and broadcast work undoubtedly adds something extra to the mix. “I am a hybrid creature, I know about boards because I serve them, and on the other hand I would be a leavening influence.”

Sue Shipley, head of the retail practice at headhunter Odgers Berndtson, believes that a high-profile face can fit well within a board structure. She says: “With non-executive boards you need to get a balance. You are not going to recruit in one image. There is no harm having someone on board who can be your consumer champion - but they won’t have the skills to chair your audit committee. Clearly when it’s a small board there are certain bases that you have to cover.”

Shipley adds that someone famous from outside the sector on the board can benefit the business with their network and profile. She says Matthew Pinsent’s contacts within the sporting world makes for a good fit for JJB Sports, and he also has a great reputation. “There is a lot of value he can bring to the brand,” she says.

And similarly, she says, Martha Lane Fox, aside from her technology experience, brings an element of the customer champion and representation for younger consumers to Marks & Spencer’s board.

However, Wallis questions how much a woman on a board can represent the interests of a retailer’s female customer base if she has the same business background as each of the male directors.He explains: “You have neutered that bit of relevance.”

A source close to JJB Sports admitted to Retail Week that Pinsent’s value will come from his sporting connections and profile in that world. Wallis agrees that he was able to use his network to some effect in his time at MFI. “I have a different type of network, but it is very wide. Some of it has been of use to MFI or Galiform, and some is irrelevant,” he says.

But he also warns that a retailer will have to support a non-executive director from a non-traditional background if they are going to be able to properly participate in the board’s work.

“The problem for an incomer who doesn’t know about the basics is that they are floundering,” Wallis adds, saying it takes time to learn all the three-letter acronyms each business uses. He adds: “I know all the contractual issues and terminology now - but I still come from somewhere else, as I was never an accountant or a lawyer.”

Wallis says his experiences at MFI have not put him off being a retail non-executive, and he would consider other offers. “I’ve enjoyed it, and learnt things, and have always to think about how I can be useful and carve out a space.”

MWM Consulting has placed non-executive directors with several major retailers. Partner Nick Green says retailers need a mix of people on their board, but having experience in consumer industries is particularly helpful. He says: “You want a mix of people. Most want at least one serving chief executive - to have an affinity with the current chief executive - and to bring current operational experience.”

Other skills and experience that are useful as part of the mix include someone with the financial credentials to chair the audit committee and maybe a retired chief executive who can bring “a few grey hairs” as well as experience of sitting on other boards.

Several retailers have hired non-executives who have a background on the boards’ of media organisations. Green says: “Part of the challenge, especially for growing retailers, is that they want people who understand the consumer and consumer behaviour, but do not conflict with the retailer’s operations.

“This makes them good non-executives because they bring relevant experience that helps them make a contribution to the board debate.”

Just a figurehead?

Despite her career having been in broadcasting, Anna Ford is making a demonstrable impact at Sainsbury’s. She sits on the remuneration committee, and has also been given the chair of the corporate responsibility committee.

This committee reviews Sainsbury’s key corporate responsibility policy, taking into account the company’s corporate responsibility objectives and the overall strategic plan. Two formal meetings are held each year in addition to corporate responsibility strategic meetings hosted by Anna Ford and Sainsbury’s chief executive Justin King, each of which is based around one of the five corporate responsibility principles.

Green says that a standard non-executive on a FTSE 100 board can expect to earn £60,000 to £70,000 a year for about 20 days work. For a smaller board the remuneration would be in the region of £30,000 to £50,000 a year. Non-executives may do extra consulting work for a retailer, though the fee will be publicly reported alongside their normal salary.

But non-executives also need to be flexible. For example, Green says there will be times when more will be expected. “If there is a chief executive or chairman succession they might need to be much more heavily involved.”

Green says that when MWM Consulting was recently seeking the replacement for Marc Bolland in the chief executive role at Morrisons, the whole of the grocer’s board was available to meet candidates on a Saturday morning. He adds: “This was a fairly time-intensive process.”

Shipley adds that a non-executive can expect to attend about eight to 10 board meetings a year. But they should also be “doing store visits and getting out and getting into the guts of the business”.

While on the board at MFI, Wallis was always prepared to give an opinion on the retailer’s marketing, which he said it was spending up to £50m a year on. “I put in my two pennies when I saw an ad spread, and I would feel confident. I read all the market research, and sometimes suggested topics for market research and someone to do it.”

Shipley expects to see more non-executive appointments of this type, and says that retailers’ boards do have space for these type of hires.

Green concludes that retailers need to pay as much attention to the background and credentials when they appoint a non-executive as they would any senior appointment. “The reputation and integrity of the board is at stake with every appointment to the board,” he says.

Keith Hellawell - Sports Direct

Career history

Hellawell was a miner for four years before spending 36 years as a policeman, rising to become the chief constable of two police forces.

Between 1998 and 2002 he worked directly for Tony Blair, and wrote and co-ordinated the UK’s national and international anti-drugs policy.

Hellawell has also served as a non-executive chairman or director of a number of diverse companies and is currently non-executive chairman of pharmaceutical and consumer health company Goldshield Group, which he joined in May 2006.

He left school aged 15, allegedly with a school report saying that he was good at sport but little else and went to work as a miner. However, since then he has completed degrees in both social policy and law. While with West Yorkshire police he was very much a reformist, shutting police station bars, reducing desk-based positions and hiring more beat officers.

Role Non-executive chairman of Sports Direct International.

Fee Unknown, his predecessor Simon Bentley was paid £144,000 in his role as acting chairman in the 2009 financial year.

Responsibilities Sports Direct’s board currently plans to meet on a pre-planned basis six times during each year, including a strategy meeting, and meets on other occasions as required. During the 2009 financial year the board met on nine occasions.

Matthew Pinsent - JJB Sports

Career history

In 1992, the same year he graduated from Oxford University, Pinsent won his first Olympic gold medal at the Barcelona games.

He went on to win three more Olympic gold medals for Great Britain, as well as 10 World Championship gold medals in his rowing career.

In 2005 he was an ambassador for the successful London bid to bring the Olympic Games to the UK. He is now a sports reporter and presenter for BBC News 24 and writes for The Times.

Pinsent has had some experience in the corporate world as a motivational and after dinner speaker - for businesses such as Procter & Gamble.

Role Non-executive director at JJB Sports.

Fee Details of the fee paid to Pinsent have not yet been published, but in its 2009 financial year, two other non-executive directors were paid £40,000 and £45,000 respectively.

Responsibilities JJB’s board normally meets about 10 times a year. However, during the 2009 financial year - before Pinsent was appointed - the board had to meet 30 times because the company was on the brink of collapse.

Anna Ford - Sainsbury’s and N Brown

Career history Ford retired from the BBC after a career spanning 32 years in news and current affairs.

Role Non-executive director of Sainsbury’s and N Brown Group. At Sainsbury’s she chairs the corporate responsibility committee, and sits on the remuneration and nomination committees.

Fee She was paid £60,000 by Sainsbury’s in the 2009 financial year. Her exact fee from N Brown is not yet known, but other non-executives were paid between £17,000 and £33,000 in the 2009 financial year for performing this role.

Responsibilities Ford attended eight board meetings, two corporate responsibility committee meetings, four nomination committee meetings and five remuneration committee meetings in a year for Sainsbury’s. Meanwhile N Brown’s board met eight times in its last financial year, and at least one meeting is held over two days and devoted to corporate strategy.