There are few people more qualified to comment on life in the boardroom than Alison Carnwath. Her CV includes 20 years as an investment banker, 30 years serving on executive boards, her current role as chairman of Britain’s largest listed property company and until recently, the only director on the board of three FTSE 100 companies at the same time.
This latest change in status was only precipitated by Man Group dropping into the FTSE250 at the end of June, and is no indication of Carnwath slowing down. In fact, she is more embroiled in the machinations of the City than ever.
If I put Joe Bloggs, a good guy who drives a taxi, on the remuneration committee, I don’t see how that would work
As then chair of the remuneration board of Barclays, she took partial responsibility for the decision to award chief executive Bob Diamond a £17.7m pay package in April 2012 in the midst of the "shareholder spring", including a £5m tax payment paid on his behalf by the bank.
Since Carnwath spoke to economia in June, Diamond and two other senior Barclays executives have been forced to resign. Diamond blamed the "external pressure" that had built up on Barclays in early July after MPs called for his resignation, and the government announced an inquiry into the LIBOR-rigging affair.
Her corporate roles have not won her any popularity awards. Before he became deputy prime minster, Nick Clegg attacked her as the embodiment of "crony capitalism", and in the left-wing press she has been repeatedly dubbed a "serial non-executive". She admits ruefully: "They haven’t been the kindest journalists. But I’ve had a lot of visibility because of my activities on some of these very interesting boards. So it’s par for the course."
A force to be reckoned with
Politics aside, she remains a force to be reckoned with. Hers is one of those personalities that impresses as soon as she enters the room, and her enthusiasm and excitement for the financial world is unsullied where many have become cynical.
"Welcome to our humble abode," she greets me cheerfully in the slick Mayfair offices that advisory firm Evercore, where she is senior advisor, has just moved to. She lives in Devon, with her husband, but spends much of the week at their second home in London, which they have been able to maintain, she says with a wry smile, "because of my ill-gotten gains as an investment banker".
Not that she is there much; several of the boards she sits on are international and she spends a lot of time in the air.
"I know everyone gets fed up with sitting on aeroplanes, because our elders and betters have told me you do," she says. "But I haven’t yet." It’s hard to imagine who she thinks these betters are, for Carnwath has certainly earned the tag of "City veteran".
Concurrent with her positions at Barclays, Man Group and Land Securities, she is also on the board of insurance giant Zurich, US technology company Paccar and ISIS private equity partners, which owned fashion brands Fat Face and Bonmarché. Previous directorships include companies as diverse as Friends Provident, Glas Cymru, Gallaher and Welsh Water.
She’s been on both sides of the boardroom table. After completing a degree in economics and German, she decided she wanted to get a professional qualification – "It was a toss-up between accountancy or law, but I liked that with accountancy you got to train on the job". She qualified at Peat Marwick (later to become KPMG); moved from there to Lloyds Bank, and then to Schroders for 10 years, which she describes as "one of the most enjoyable parts of my life".
When we met in June, the Barclays LIBOR scandal was yet to unfold, but the bank is nevertheless central to our conversation. She refuses to comment on press speculation that she was not initially in favour of the mammoth payout for Diamond, although is willing to admit that the board might have "got it wrong" in terms of his pay.
"You have to keep a lot of the key indicators at the front of your mind when you look at overall pay packages in a bank," Carnwath says. "What is the return on equity, the revenue line, the efficiencies? Is the bank taking costs out? Can a bank like Barclays return to an adequate level of return on equity so the shareholders get a proper return?
I find making decisions quite easy, but it doesn’t mean to say I’ve always been right. I think people who always think they are right are probably quite often wrong
"When it comes to the top echelons of Barclays, obviously the remuneration committee has to make its own decisions, and there are a lot of pressures that come to bear. It’s not easy, and we don’t always get it right. We clearly didn’t get it right this year. The shareholders were a little upset, although they weren’t upset in the same way as we’ve seen at other companies; our proposals did get through.
"But, whereas in previous years we would have got perhaps 85% voting in favour of our remuneration report, this year it was just over 70%. So clearly there were some major institutions that were not in agreement with what we did, and we must try to communicate better."
The 31% of Barclays shareholders who rejected the package in April would agree. Although it wasn’t enough to get the report voted down, it did send a warning to boards around the country. And 24% voted against Carnwath herself.
Her role at Man Group has also been under close scrutiny amid this rising wave of shareholder activism. The shareholder advisory body ISS recommended its pension fund clients vote against Carnwath’s re-election to the board in May, on the grounds that she is no longer independent, after 11 years at the group. The vote saw 33% of investors failing to support her. In spite of the wave of criticism, she maintains that a delicate balance has to be found between remaining competitive and keeping pay packages in check.
"You’ll say that I would say this anyway," she says, with that characteristic grin, "but I’m still going to say it. These jobs are hard. To be chief executive of a plc is a 24/7 job that people do normally when their families are growing up, with a lot of stress."
But, a lot of jobs are stressful, and we don’t all get rewarded for time away from our children with a six-figure-plus salary.
"I agree with you," she says emphatically. "I’m very sensitive to the general feeling out there, when people are miserable and unemployed. [At Barclays] we definitely tried to take into account the political mood and the mood in the country."
There have been failings in remuneration committees, she admits, and there are more pressures coming to bear than there used to be, with the new government pressures and European regulations. "It’s a more time-consuming job than it used to be, and they’ve got to engage with shareholders better."
The government has been trying to tackle this question. It is proposing to limit the number of boards executives can sit on, in a bid to tackle the perceived "old boys’ club" culture.
Carnwath is unconvinced. "Without wishing to be unduly cynical about our politicians, you sometimes feel that some of these areas that they are getting themselves involved in are partially to fight their own political battles, as opposed to being that well informed about the banks.
"I think to have people on remuneration committees who have very little experience of how remuneration works is a bad thing. So, where do you source these experienced non-executives who know about remuneration? Well, they will be either people like myself who have sat on a number of remuneration committees, or they will be executives who have retired who will have understood completely how the companies they used to work in structured their remuneration, or they will be existing executives. If I put Joe Bloggs, a good guy who drives a taxi, on the remuneration committee, I don’t see how that would work. You have to have some sensitivity to how businesses operate and their culture. You have to understand the business.
"I think the government and media emphasises too much that X is a chum of Y, and X sits on another company board with Y, and they can dictate the pay because they are all in some sort of club. I think that’s slightly old hat these days."
But she admits: "None of us can be proud of how all this was portrayed to the great British public." She’s keen to point out that she is aware of the mood in the country, and what "people have had to put up with, ordinary people like you and me. When I’m not doing my job I’m an ordinary person.
"But, remuneration and risks aside, to sit on the board of somewhere like Barclays, you have a window on how the world is working. You see where the capital flows are around the world, you see where the liquidity is, and you see where the stresses are in the financial system." Like any ordinary person, she worries. "I sometimes wake up worried – or don’t go to sleep at all because I’m anxious," she says. "That’s not so good. Last night I lay awake fretting about something. I then have to stand up and somehow all the worry drains out of my feet, or I write things down.
If you wake up in the morning and you don't want to go to work, and that happens for six weeks or so, then it's time to go
"I find making decisions quite easy; but it doesn’t mean to say I’ve always been right. I think people who always think they are right are probably quite often wrong. I’m happy to be in business with people who get things wrong occasionally; I certainly want to hear people admit they’ve not got things quite right at times."
But she must be doing something right. The companies she represents have backed her to the hilt in the face of public criticism. Land Securities recently hailed her as a "great chairman" and it saw profits rise 9% to just shy of £300m. "Oh yes, print all of that," she smiles. "We are optimistic; we’re making good strides. The "Walkie Talkie" is going up a foot a week," she says, gesturing out of the window to indicate Land Securities’ flagship City development at 20 Fenchurch Street.
"Will there be another property bubble? History tells you that there will. In terms of Land Securities, I think we are better prepared, with better indicators, better risk management controls. But human nature does sometimes take over." Her enthusiasm for banking is obvious. Peat Marwick was "wonderful", Schroders was "very exciting" (despite the fact that "the hours were often very difficult, very long,"), and her time spent at niche partnership Phoenix Securities, which was later sold to US investment bank Donaldson, Lufkin and Jenrette, was a "very interesting time".
But after selling the Phoenix partnership and taking her share of the sale, she knew her investment banking days were over. "I just decided that after 20-plus years in investment banking, I’d find something else to do. I hadn’t a clue what. If you get up in the morning and you don’t want to go to work, and that happens for six weeks or so, then it’s time to go. I knew I could survive pretty well without doing much at all, but that wasn’t my mindset. I wanted to get back into doing something. So I decamped to Devon and got involved in all sorts of strange and unsuccessful ventures, some which I made money on, some I lost money on. That’s par for the course."
Inevitably, she was lured back to the City. "One or two people called me up and were wondering if I’d like to come and sit on their boards," she says. "I don’t really know how this arose, but it became my life, a combination of sitting on public company boards, domestic and international, and private equity, which I think is a fantastic business."
It’s her appointment as chair of Land Securities in 2008 of which she is most proud. "It was the proudest moment of my career," she says. "It’s such a fabulous, modern company. It understands about corporate responsibility and sustainability and it’s such fun." And the worst moment of her career? "I’ve had some dark moments, but I don’t really want to talk about them."
And with that, she brings the interview to an end.
1975 joins Peat Marwick (now KPMG), qualifies as an ICAEW Chartered Accountant in 1979
1980 Joins investment banking arm of Lloyds Bank International
1983 joins J Henry Schroder Wagg & Co, the investment banking subsidiary of Schroders, joining the board in 1988 as corporate finance director
1993 Senior partner in the corporate advisory Phoenix partnership, acquired by DLJ in 1997. Becomes MD of DLJ in New York until 2000
From 2000 to 2005 as chairman of the board of Vitec Group plc
2001 appointed director of Man Group
2001 to 2006 a director of Welsh Water
2004 to 2007 director of Friends Provident
2004 to 2007 director of Gallaher Group
2008 appointed chairman of Land Securities
2010 joins the board of Barclays
2011 joins the board of Zurich Insurance Group