Scots Give Dual-CEO Model a Reprisal, but Investors are Skeptical

They may have spent plenty of time fishing together, but whether that means Keith Skeoch and Martin Gilbert can jointly control a giant fund manager is a different question altogether.

The respective heads of Standard Life and Aberdeen Asset Management this week set out their job-share plans in a bid to convince a skeptical market they’ll be able to successfully leverage their respective talents, without ever coming to blows.

Their decision to hold onto power following an £11 billion ($14 billion) merger of their companies has set them swimming against the tide. Last year, the likes of Chipotle Mexican Grill, Whole Foods Market and Swiss watch-maker Richemont all dumped their dual-CEO models after finding it confused their strategies. Deutsche Bank and BlackBerry are among other companies that have reneged on the model in recent years.

According to a statement released by Standard Life, the more camera-shy Skeoch will be responsible for running day-to-day operations such as investments, insurance, finance, human resources and compliance. Gilbert, meanwhile, would be more outwardly facing, taking charge of marketing, business development and international activities.

“THIS BLEND OF COMPLEMENTARY SKILLS AND EXPERIENCE WILL SERVE THE COMPANY WELL.”

The pair would have joint accountability for the post-merger integration program and communicating the company’s strategy.

“Both boards have thought carefully about the key responsibilities and believe that the proposals play well to Keith’s and Martin’s respective leadership strengths,” Gerry Grimstone, chairman of the proposed combined group, said. “This blend of complementary skills and experience will serve the company well.”

Both men certainly have experience. Gilbert has been in charge of Aberdeen since 1983. Skeoch, meanwhile, became Standard Life CEO in 2015, having served in various senior positions since arriving as chief investment officer in 1999.

Neither man has ever had to split a senior executive role before. And, by jointly leading following a merger, there are fears they could personify the kind of cultural clashes that inevitably surface when two big companies combine.

The pair have, however, been friends for 30 years, despite having “very different’ personalities, Skeoch told investors on a conference call this month.

An analyst at Royal Bank of Canada said Standard Life’s latest announcement appeared to be “an attempt to assuage market concerns” about the leadership model. Others have put things more bluntly. “A company has to have one boss. Knowing each other and working together are two very different things,” Mark Dampier, head of investments at Hargreaves Landsdown, recently told Bloomberg.

Of course, there are still a few companies run by two heads. The biggest is Oracle, steered by Safra Catz and Mark Hurd since Larry Ellison stepped down in late 2014. With that company’s shares only recently heading toward a high point hit a few years ago, the effectiveness of the model there remains to be seen.

Shopping mall giant Westfield Group has been run by Peter and Stephen Lowy since 2011. That one’s a family affair—though if two brothers can keep it together for such a long time there may be hope for all.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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