The head of Alliance Boots did not even make last year’s Power 100. Yet in just a year Stefano Pessina has shot straight in at number one. Kurt Jacobs and Sam Metcalf discuss the thinking behind this year’s Power 100.
It would be easy to dismiss Stefano Pessina as a one-hit wonder – the man who got lucky by pulling off a once-in- a-lifetime deal.But this would be to underestimate the executive chairman of Alliance Boots – as our biography makes clear, his rise was no accident – and the changing nature of Power 100 because almost a third of this year’s list are new entries. Rather than just swapping the order of a few people, leavened with a sprinkling of fresh names, this year’s Power 100 represents a radical overhaul on previous listings, with 31 new entries.
This is partly because of the fluid nature of top jobs in the Midlands economy – names such as Experian’s Tiku Patel, Severn Trent’s Colin Matthews and AWM’s John Edwards – are among many who have “moved on”. It’s also because we’ve taken a deeper look at the Midlands economy and included some individuals – Halford’s Robert Pym and Phone4U’s Tim Whiting – who have not appeared before.
But the main reason is that we have decided to include far more faces from the world of politics, government and quangos. This gives a more realistic view of who influences the Midlands economy. Rightly or wrongly, such people have an enormous influence, setting the development, transport and economic strategies that spur or deter commerce.
This has meant many names – 39 in all – have been effectively demoted, often despite them having achieved more than last year, and some at the tail end have shunted off. This may seem unjust, but to reflect the real nature of the Midlands it is necessary. Power 100 ranking, like love war and business, are not always fair but unlike at least two out of those three, they are unbiased.
1 Stefano Pessina
Executive chairman, Alliance Boots
Powerbase: Drugs.
What’s he done lately? He’s the 426th richest man in the world. He owns a multinational pharmaceutical business that has just reported a 20.3 per cent rise in profits since he took charge, and he’s even got the confidence to move the headquarters of Nottingham’s best- known company to Switzerland.
There is no one more powerful in the Midlands than Stefano Pessina, the executive chairman of Alliance Boots. Pessina led the £12.4bn private equity buyout of Alliance Boots last year backed by Kohlbery Kravis Roberts, the equity house giant. Since then he’s managed to stave off allegations from sceptics in the East Midlands and beyond that he is only in it for the assets.
Pessina has pledged to pump even more money into Alliance Boots to fund a global expansion drive. In the year to March, Alliance Boots amassed profits of £770m and, despite the company losing £64m on a pre-tax level because of the interest payments on the £9bn debt raised to fund the takeover, Pessina is continuing to make bold moves.
In January 2008 the manufacturing side of the business, based in Nottingham, was separated from the retail arm. Yet both have continued to thrive. Over the past year Boots has opened 130 stores in the UK, and 40 overseas. Pessina’s vision for Alliance Boots is to see it as an international brand. Moving board meetings to Switzerland was explained as “moving the company there because most of the main drugs companies are in Switzerland”. He has a point, and he has guaranteed there will be no job losses at Nottingham.
Pessina has shown he intends to run Alliance Boots with an iron fist. He stated recently there would be no dividend declared as he sticks rigidly to his strategy of reinvesting profits back into the business.
He has even managed to keep the banks on side by saying he feels sympathy for their inability to sell on the £9bn of debt raised in the buyout. They seemed to have taken it on the chin.
Of course, Pessina has his critics, and at all levels. Some will say his decision to move the Alliance Boots headquarters to Switzerland smacks of tax dodging. He denies this flat. Nottingham locals regularly flood the local paper message boards with doom-filled paragraphs predicting the imminent death of the world’s best-known pharmaceutical brand, as well as mass redundancies in Nottingham.
Yet Pessina also says this simply isn’t true. His direction has been forward looking, displayed by a statement after the announcement of the results, when he said: “These results show Alliance Boots has made good progress and delivered an excellent financial performance. We are investing in the group for the long term and I am confident we are on track to build the world’s leading pharmacy-led health and beauty group.”
Time will tell whether the naysayers are right. But for the past year Pessina has not put a foot wrong. He has been true to his word and deserves to be at the head of this year’s Power 100.
2 Sir Anthony Bamford
Chairman, JCB
JCB Powerbase: Big diggers.
What’s he done lately? Dug deeper still. Sir Anthony’s family-owned business has doubled in size to £2.5bn in the past few years and become a global operator with facilities in the US, Brazil, India, China and Germany. His belief in research and development has been repaid, with new ranges accounting for half that growth.
3 John Rose
Chief executive, Rolls-Royce
Powerbase: Engines.
What’s he done lately? R-R has had a stellar year and Rose continues to wield power 12 years after taking over as chief executive. He’s taken tough decisions in the face of competition from India and China, but R-R’s order book remains at record levels.
4 David Smith
Chief executive, Jaguar Land Rover
Powerbase: Automotive.
What’s he done lately? Smith’s confirmation as top man at the two luxury Midlands car brands comes at a pivotal point in world business. Tata has bought two marques from Ford, confirming India as a major economic power. Smith takes on two brands that are well regarded but have issues – Jaguar’s sales have been difficult, while Land Rover faces a plethora of rival wanabees and a cooling by the public for 4x4s.
5 Sir Nigel Rudd
Deputy chairman, Barclays; non-executive chairman, Pendragon and BAA.
Non-executive director of BAE Systems and Sappi
Powerbase: Kingmaker.
What’s he done lately? Rudd might have ceded power at Boots, but his fingers remain firmly in various pies. He’s seen as the man who dispatched BAA executives following the Terminal 5 fiasco at Heathrow. The next few months could be interesting as he remains on a collision course with Jack Petchey, the entrepreneur, who has a secret stake in Pendragon, the UK’s biggest car dealership.
6 Sir Michael Lyons
Chairman of BBC Trust
Powerbase: Quangoland.
What’s he done lately? Been ubiquitous. Probably the most connected man in the Power 100, the former chief executive of Nottingham, Wolverhampton and Birmingham city councils became the BBC’s chairman following the exit of Michael Grade. Also sits on boards of City of Birmingham Symphony Orchestra, Millennium Point Property Trust and The Royal Shakespeare Co, among others.
7 Liam Byrne
MP for Hodge Hill, minister for the West Midlands and minister for borders and immigration
Powerbase: Commons, West Midlands.
What’s he done lately? Better than many expected. Considering he has few powers in the region bar banging heads together, Byrne has surprised many sceptics for promoting the West Midlands and getting vested interests working together. He’s one of the few Labour MPs to have worked in the real world – Accenture, NM Rothschild and launching a successful public sector e-procurement business.
8 Clive Dutton
Planning and regeneration director, Birmingham City Council
Powerbase: Planning.
What’s he done lately? Got it going. A flood of projects has started in Birmingham, for which Dutton must be given credit. His drive to create a masterplan, well received by business and the public, represents a once-in-a-lifetime chance to redraw the city economically and physically.
9 Mick Laverty
Chief executive, Advantage West Midlands
Powerbase: Regen, inward investment, business support.
What’s he done lately? Emerged as head of AWM after a head to head with English Partnership’s Paul Spooner. Largely responsible for the agency getting a National Audit Office top rating.
10 Jeff Moore
Chief executive, Emda
Powerbase: East Midlands.
What’s he done lately? Emda has developed a fan club among East Midlands businesses with simple but ambitious targets. Moore has given a cautious welcome to plans to reform delivery of sustainable economic growth in England.
To read the rest of the Power 100, contact our subscriptions team to receive a copy of this issue or click here to visit our shop.
Also in: July 2008
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Overcoming the negatives
The high street is dead. Tell that to David Adams who parachuted into stricken camera retailer Jessops last year and embarked on a mission to save the company. He’s only just begun, says Sam Metcalf.
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Aerospace: the final frontier
Pity poor aerospace? Never! It might be an unsung hero in the Midlands, but as other areas of manufacture decline it powers on, says Sam Metcalf.
