Comment: Was former Tesco boss Lord MacLaurin’s criticism of Sir Terry Leahy fair?

It wasn’t quite a regicide, but former Tesco boss Lord MacLaurin’s criticisms of his successor Sir Terry Leahy prompted sharp intakes of breath - and some applause - at the grocer’s AGM last week.

MacLaurin condemned the state of the retailer that Phil Clarke inherited from Leahy when he handed over the reins in 2010.

“When you judge the performance of a chief executive, you not only judge the performance of day-to-day business, but his legacy,” said MacLaurin. “I think we’re all very sad in this hall to see the legacy that Terry Leahy left.”

MacLaurin’s general point is correct, but surely fails to take into account Leahy’s contribution to Tesco’s success, from international expansion to online. By the time Leahy was ready to move on an element of hubris had probably crept in. The American adventure, which never quite looked convincing from day one, and the loss of focus on the flagship UK business took a heavy toll.

But Tesco is not bust. Far from it. Its scale, expertise and success remain the envy of many despite the need for restructuring and renewed engagement with consumers.

MacLaurin pointed out that it will take years to put Tesco back on track and that it is being remodelled in “an age of short-termism”. He made a worthwhile point.

A chief executive’s reputation can be shredded overnight and successes scrubbed out by failures. Similarly, while some investors might lend support to turnarounds that will take time, others are more interested in intra-day dealing.

The system of quarterly updates perversely undermines a long-term attitude to investments. Designed to ensure transparency and keep investors informed, the reality is often frenzied buying and selling without much thought about a company’s long-term prospects - good or bad.

The side-effect can be that company directors become swayed by the imperatives of the minute rather than an outlook over the years. There’s no sign of that happening to Clarke, although creating shareholder value is important.

MacLaurin’s comments might be paraphrased as ‘the king is dead, long live the king’. And long-live a long-term view.