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L&G succession planning misses the mark

Chief executives always like to see their company’s share price dip when they announce their departure. As such, the 3% drop in Legal & General’s share price is a compliment to Nigel Wilson’s stewardship over a decade in which investors in the $19 billion UK insurer enjoyed a comfortable ride. But it might also express mild discontent with the board’s succession planning.

Wilson, a 14-year veteran of L&G, extended the group into housebuilding and was a vocal advocate of regulatory changes to free up investments in riskier assets such as infrastructure. But he also delivered on the basics. Under his tenure, the London-listed insurer made a 270% total shareholder return, less than European peers like Allianz and Axa but outperforming UK rivals such as Aviva.

Even so, the smoothest way to sign off on Wilson’s tenure would have been to announce his successor now, rather than the news it might take up to a year to find one. After all, the L&G board had long enough to identify a suitable internal candidate. Chairman John Kingman’s reticence may reflect a preference for a big-hitting external candidate to grow the company beyond UK borders. Fine, but the upshot is L&G investors face an unfamiliar period of uncertainty. Reuters

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