Mr Staley, Barclays’ CEO, has been sanctioned because of his attempt to identify a corporate whistleblower. Does the episode reflect poor corporate governance standards at Barclays or not?
The facts as reported suggest that this was a personal misjudgment by Mr Staley. The Board as a whole, under the guidance of its Chairman, seems to have behaved appropriately. When it became aware of Mr Staley’s behaviour, it commissioned an independent enquiry that reached the conclusion that Staley had behaved inappropriately. It has promised to sanction its CEO once the regulators’ inquiries are completed.
Some politicians have called for Mr Staley to resign should the regulators find fault with his behaviour (which seems inevitable). Others have argued that he should stay. Mr Gary Greenwood, analyst at Shore Capital was reported as saying that to “remove [him] from his role at this juncture would be damaging to further operational progress, with an improvement in return on equity now the key area of focus.”
Both are wrong.
Let us start with Mr Greenwood. If Mr Staley’s ethical standards are found to be faulty, then he should be removed. Given the issues we have all lived through since 2008, operational performance must not be allowed to trump proper governance standards. Mr Greenwood’s position highlights the risks of allowing investor groups to be the main overseers of governance standards – a point we have clearly made in our recent report on corporate governance. Investors are not a homogeneous group. Some, maybe even many, will continue to prioritise operational performance ahead of corporate governance standards. Delegating the policing of governance standards to investor groups puts the fox in charge of the hen house.
As for those asking for Mr Staley’s head, everyone makes mistakes. If this was an honest mistake that does not reflect more broadly on Mr Staley’s ethical standards, then it seems unreasonable to dismiss him. A yellow card should do.
Were our corporate governance recommendations to be implemented, a Governance Standards Body would mark this episode up as a failure of governance by Mr Staley. Two more infractions at Barclays and he would be banned from holding a company directorship for a minimum of five years.