Standard Life, Aberdeen face tall order proving co-CEOs can work

Mon Mar 6, 2017 2:23pm EST
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By Simon Jessop and Carolyn Cohn

LONDON (Reuters) - Bankers in Britain have a phrase for chief executives who share control of a company: "co-head, you're dead".

The use of co-CEOs at major companies has a chequered history, with personality clashes and governance concerns meaning the model is rarely used for prolonged periods of time.

Standard Life (SL.L: Quote) and Aberdeen Asset Management (ADN.L: Quote) are hoping to buck that trend, with respective CEOs Keith Skeoch and Martin Gilbert planning to share control if an 11 billion pound ($13.5 billion) tie-up goes through.

But they face scepticism.

Shore Capital analyst Eamonn Flanagan said he had "grave concerns", citing his negative experience of a similar structure when insurance firms Royal Insurance and Sun Alliance merged in 1996. The two bosses of the merged firm had both gone within two years, following culture clashes and poor company performance.

"To us, a single CEO calling the shots and retaining overall responsibility is critical in all such (merger) transactions ... we wait to see how the chemistry between Skeoch and Gilbert develops," Flanagan said in a client note.

The co-CEO model is rare in Britain, with only seven companies across the FTSE 100 and FTSE 250 using it, data from corporate governance adviser Manifest shows.

"It's rare but not unknown, and usually it's for a specified period of time or to cover a particular issue," said Manifest CEO Sarah Wilson, citing previous power couples at retailer Sainsbury, real estate investor Hansteen and food supplier Cranswick.   Continued...

A worker walks inside the Standard Life House in Edinburgh, Scotland February 27, 2014. REUTERS/Russell Cheyne