Sir Jan du Plessis is the former chair of RHM, British American Tobacco (BAT), Rio Tinto, and SAB Miller, as well as BT. He has been nominated by the UK government to be the next chair of the Financial Reporting Council through its transformation into the Audit, Reporting, and Governance Authority.
From tobacco to mining and banking, the industries you worked in had to tackle stakeholder-related questions earlier than most. As society increasingly asks more from business, what’s your advice to the boards of companies that haven’t yet felt that level of scrutiny?
There’s only one way to deal with stakeholder-related challenges, and that is to confront them head-on. You don’t have to agree with all the challenges being raised, but you cannot pretend that they don’t exist. And you’ll be surprised to see how animosity fades away as soon as you engage with people and demonstrate that you’re serious about addressing their concerns.
To give you one example: at my first AGM as BAT’s chair, we were asked some pointed — but also tough and genuine — questions by an anti-tobacco organisation. The moment the meeting was over, I walked to the person who had asked them and asked her if she wanted to have a coffee and talk. She never followed up on the invitation, but the next AGM was the first one in a long while where that organisation didn’t raise any challenging questions — and I suspect it was because they weren’t quite sure how to respond to my goodwill gesture.
“If anyone at board level still thinks it’s not their job to tackle the tough questions asked by society, they’re delusional.”
Similarly, Rio Tinto has very passionate stakeholders — with some of them flying from as far as Papua New Guinea or Canada to attend Rio Tinto’s AGMs in London. So, I’d always make it a point to ask, “If anyone here hasn’t had a chance to talk, please put your hand up.” That didn’t fix these people’s problems by any means, but it’s through these little things that you deescalate a potential fight into a conversation and then start looking for common ground.
As a leader, you may resent the growing attention that your organisation is getting, but you need to come to terms with it because public expectations are only going to increase. Just 15 years ago, climate change and sustainability wouldn’t even come up when you’d be meeting with large institutional shareholders — or, at best, a junior in the room would ask something in the last minutes of the meeting. These days, it’s front and centre of most discussions. If anyone at board level still thinks it’s not their job to tackle the tough questions asked by society, they’re delusional.
How do you bring these varied — and in climate change’s case, incredibly complex — issues into the already-busy board agenda?
As a chair, the question you’re always asking yourself is: “I only have so many hours for my board meetings, how do I allocate them in a manner that gives every item the time it deserves?” And between all these extra topics that now must be on the agenda, not to mention all the other business items that you can’t just get rid of, the answer is simple: it’s impossible to do everything at board level.
So, just like you have audit and remuneration committees, you need to form new board committees and delegate as much of the work as possible to them. Some boards are uncomfortable with that delegation, because it might give the impression that directors consider these topics unworthy of their time — but you’re actually doing it because these subjects are worth being discussed in depth, rather than crammed between other agenda items.
“Some boards are uncomfortable with delegation, because it might give the impression that directors consider these topics unworthy of their time.”
Having that space to give proper airtime to complex issues can be transformative. At BT, for example, having a sustainability committee meant we were one of the first large companies to determine science-based carbon reduction targets and measure our carbon footprint back in the 90s. This was long before it became fashionable — and, as much as I’d like to claim credit for it, long before I joined!
You’ve both fought against acquisitions and accepted an offer for what was then the third-largest takeover in history. How did you lead your board to make each of these calls at the time?
Every takeover — or attempted takeover — is a story of its own. I’ll give three of my own examples to illustrate:
The first takeover I was involved with happened shortly after I became the chair of RHM, which was then the biggest food manufacturer in the UK. That company owned wonderful household-name brands, but was also a fundamentally weak business, because the Tescos of this world held most of the negotiating power. And it quickly became apparent that we needed more heft and that a takeover was the best path forward.
So, we made our case to Premier Foods, a similar company that was facing the same set of challenges, and persuaded them to acquire us at a 30% premium. Everyone on the board knew that this would mean putting ourselves out of a job, but it was the decision that made the most strategic sense, and we were therefore glad to make it.
The second instance happened while I was chairing Rio Tinto and the company was approached by the management team of Glencore, who suggested a merger. On paper, this would have created by far the largest mining group in the world, yet I felt that the cultures of each organisation — while both successful— were worlds apart and that it would be a bad combination that’d eventually destroy value. The board agreed, and we decided not to pursue the idea.
The third major transaction was with SABMiller, when AB InBev offered to acquire us. The moment I got their phone call, I knew that this deal was going to happen, because two large shareholders on our register controlled 41% of our stock and wanted to get out. So, for us as a board, it wasn’t going to be about assessing whether selling was the right or wrong decision, but about negotiating the best possible terms. And in the end, we obtained a 50% premium over the price at which the share traded before negotiations started.
That experience left me with mixed feelings. On the one hand, I was incredibly privileged to play a role in the largest takeover — by far — that the London market had ever seen, and to do such a good job for our shareholders. But on the other hand, I felt a real sense of sadness. I was writing the final chapter of a 100-year-long history, and handing over the reins of a world-class company.
Ultimately, the hand you’ve been dealt will determine the extent of your options. But whatever your cards, it’s your duty as a director to play them right.
A decade ago, pandemics were amongst the top risks that directors were preparing for. Then, they dropped off the agenda — until 2020 caught boards unprepared. How do you bring risk to the board conversation in a way that stands the test of time?
Risk is a funny thing. Ask people about their insurance, and many will tell you, “I spend so much on my policies, but I’ve never made a claim, so it’s all a waste of money.” And boards, alas, are not that different. Go too long without a crisis and directors start thinking, “We spend so many hours discussing risks, but they never materialise, so it’s all a waste of time.”
“Go too long without a crisis and directors start thinking, “We spend so many hours discussing risks, but they never materialise, so it’s all a waste of time.”
For the chair, it’s a tricky balance. It’s often much easier to focus board members on the concrete and the now, such as business figures and strategy, rather than on abstract discussions about black swans that can feel quite academic and irrelevant to what you need at this moment.
You also have to remain aware of the limitations of such an exercise. For example, even amongst those that were discussing pandemic risks pre Covid-19, could any board have predicted what would happen, lockdowns and all? Even incredibly smart people can’t quite figure out what complex and unforeseen events will really mean — which is all the more reason to have regular exploratory conversations.
What book is on your bedside table?
I’ll reply to a slightly different question: “What book would I want to associate myself with?” And that would have to be Long Walk to Freedom, Nelson Mandela’s autobiography. I grew up in an apartheid country, and I’ll be forever grateful for what he did for South Africa.
What is your Golden Rule?
My Golden Rule is not to have one.
I’ve learnt that there’s an infinite variety of shapes and sizes in which problems present themselves, and that there’s no single way to deal with all of them. You’re better off being a pragmatist, taking things as they come, and figuring out what works best for the particular situation you’re in.