Murray Steele is Chairman of LINX, the London Internet Exchange, Octopus Apollo plc, one of the largest listed VCTs in the UK, and Surface Generation, a high-technology supplier for the aerospace and automotive industries.
What change would you make to boardrooms to make them more effective?
The biggest changes that could be made to large company boardrooms would be shaking up the “cosy club” mentality, and the fact that your chances of getting of FTSE 350 role are virtually zero if you haven’t already had a FTSE 350 executive experience. The Davis report is changing this a bit, but only with regards to gender diversity, and we’re missing out on other kinds of diversity, such as international board members or those with private company / private equity experience.
More generally, you need NEDs who don’t have the same understanding of the business as the executives, but of other businesses, industries, and innovation. In particular, boards need young people who understand digital technology.
Has the way boards operate changed much in the last few years?
I see changes in the FTSE 350 — most of them detrimental. They’ve got a great deal more governance to comply with now, which is only going to increase with the next governance frameworks, and that’s manifested itself in the size of the annual reports. The corporate governance sections have ballooned, although in many cases they’re just a tick-box, boilerplate-based exercise. My worry is that business development, shareholder value and innovation are being drowned out by the governance side of things.
What would your perfect board pack look like?
I don’t expect it to be perfect, otherwise we wouldn’t need board meetings. But I do expect it to be timely — a minimum of 5 working days before the meeting, to give you enough time to read it and ask any technical questions you might have — and to be comprehensive enough without including too much information. There’s one board where I’m actively trying to reduce the amount of information I get, because it’s way too much. What’s the cost to the business of producing this for just a couple of people?
What is your proudest achievement, or the smartest business decision you’ve made?
That would be when we decided to fight a takeover against a venture capital company. We exposed their practices to the shareholders and got the shareholders to vote down their motion to remove me, but we had to keep on fighting them because they still had certain shareholder rights. In the end, the only way of acting in the best interest of the business was to disadvantage the shareholders, and my business partner and I eventually ended up with the business, which was in huge negative equity at the time. The good news is that we saved the employment, refinanced the company, and sold it to a good home about 7 years later.
The shareholders lost out, and I’m not proud of that. But it would have been very easy to call in the administrators, instead of treading the line of insolvency and taking the risk of ending up bankrupted personally. At the time it was probably naivety, ignorance, lack of experience, and tenacity that made us think “we’re not going to give up on this.”
Are boards out of touch with society? If so, how can they re-engage?
Many boards know they’re out of touch, but are struggling with getting in touch, and understanding what it even means. Society is much more complex and fragmented than it was 30–40 years ago. There’s a growing movement of asking “what’s our place in society?”. But effective companies have always done that. Look at Walmart, the epitome of capitalism, which now uses natural gas in their trucks, recycle huge amount of cardboard, and put solar panels on the roofs of their stores — the net result is they’ve not only reduced their carbon footprint but also their costs, and shareholder value has gone up. That win-win combination is what we should be looking for.
What book is on your bedside table?
I’ve been reading a lot of political biographies, on Blair, Brown, Cameron, and the EU Referendum. The overwhelming conclusion is that political leaders are a combination of arrogance, incompetence, and hypocrisy.
What luxury item would you take on a desert island?
Would there be Wi-Fi? If so, it would have to be my smartphone or computer. I still remember sending Telex, and the internet has changed lives.
And finally, what is your Golden Rule?
Always act in the best interest of the company. It’s one of the few clear things for directors.