The Tesco chairman faced harsh words at the grocer’s AGM last week, but he remains committed to a considered, long-term approach.
Too soft, near invisible, not a retailer – these are some of the criticisms levelled at Tesco chairman Sir Richard Broadbent who last week faced shareholder anger at the grocer’s AGM.
Broadbent, the first Tesco outsider to take the chairman’s role, urged shareholders to give chief executive Philip Clarke more time to implement his turnaround of the grocer.
He told shareholders: “We, the board, are very aware that the company’s share price performance has been poor over the last 12 months. But it is important that we do not flinch from the decisions needed to shape a competitive business for the future.
“To seek simply to run the business defensively for short-term gain at a time of such fundamental change for our industry would be wrong.
“We would be neglecting our responsibilities to our customers, our colleagues and to you, our shareholders, were we to do so.
“Moreover, we would miss the opportunity, which will not be there for long, to build a Tesco which will lead in the multichannel age.”
Described as a considered and thoughtful individual, one person who knows Broadbent says he is not the type to make rash decisions. “He’s not panicking or making knee-jerk decisions. He’s very conscious of the changing market conditions and is focused on creating a future multichannel leader,” he says.
Broadbent’s plea for time seemed to work, and fears of a shareholder revolt were unfounded because 99% of investors voted for both his and Clarke’s reappointment.
Broadbent, who remained cool and calm throughout some harsh questioning at the AGM, knows how to handle himself in a difficult predicament. Before joining Tesco, Broadbent was deputy chairman of Barclays during the banking crisis.
At Tesco he succeeded David Reid, a former Tesco executive, as chairman of the grocer in 2011. Broadbent’s appointment surprised some because of his limited experience in consumer facing industries.
However, few could doubt that he is a heavyweight in business and government. He started his career at HM Treasury before joining Schroders, where he rose to be head of corporate finance. In 2000, he returned to the civil service and was hired as executive chairman of HM Custom and Excise and joined the management board of the UK Civil Service for a three-year stint after which he received his knighthood in 2003.
More recently he has sat on the board of both Barclays and transport group Arriva, which he chaired until 2011.
His lack of retail experience is not unusual for chairmen in the sector but some shareholders questioned whether it was hindering Tesco’s performance.
Private shareholder Anthony Lee said to the hundreds gathered at its AGM: “When the going was good at Tesco, the board contained the people who ran Tesco. There is only one member of the board now who is running Tesco.”
Broadbent might not have retail experience, but his City and government experience are useful to the grocery giant. He also has international experience from his time at Barclays and Arriva, which can only help Tesco as an international business.
However, some have criticised Broadbent for being under-the-radar during one of toughest times in Tesco’s history. Independent retail analyst Nick Bubb labelled him “near-invisible” and he was twice accused of being “inaccessible” by private shareholders at the AGM – something he vowed to change.
The source said Broadbent is clear that his role is running the board and setting the strategic direction of the business while the executive team is responsible for implementing it.
He is passionate about corporate governance, says the source.
Broadbent told the AGM last week: “I am fortunate at Tesco in having a board with that capacity to entertain and debate difficult questions; to embrace strategic choices with the aim of creating sustainable value; and above all with the capacity for all of this to be discussed openly and calmly even when times are tough.”
That composure will be much needed in a grocery market that is only likely to become more volatile as Aldi and Lidl’s march continues and consumers opt for convenience over big box stores, of which Tesco has many.