In what was at first sight a fairly innocuous statement on 7th November, IAG announced some very significant changes to its governance.
Ever since BA and Iberia were sold by their shareholders to the new holding company , IAG, the Chief Executives of the two brands, Keith Williams and Luis Gallego, had sat on the IAG Board where their role was both to further the interests of the new company and to represent and even champion those of their respective wholly owned "companies". BA and Iberia also had non executive chairmen, Sir Martin Broughton and Antonio Vazquez respectively. That structure is now abandoned.
The carefully, -some would say cleverly,- worded anouncement devotes its leading paragraph to Broughton and Vazquez relinquishing their Chairman roles so as to focus on their IAG functions as Deputy Chairman and Chairman respectively. So far so good.
The second paragraph is also encouraging although not for students of corporate governance who believe the two roles should always be separated. Williams and Gellago ,now free of a Chairman sitting on their shouders, will each add that to their CEO roles. In theory not having an IAG board member sitting on their own boards might give each more independence to define their own futures and run their own businesses.
The rub though comes in the third paragraph. Having achieved "promotion" within their own brands ,Williams and Gallego will now lose their seats on the IAG board. This means that they are no longer able to represent their brands on it. They now are now reduced to being supplicants who will have to present for consideration and approval their strategies, plans and performance records. BA and Iberia will in reality have less independence and input to and control over their own destinies. The allocation of investment, aircraft and other resources will be even more controlled from the centre than it has been so far. The real power in the group now becomes more concentrated than ever in the hands of IAG which really means just three people,- Willie Walsh (the main driver), Antonio Vazquez and Martin Broughton. The other (nine) members of the twelve member Board can be expected to be less significant players. The brands themselves simply aren't now at the top table.
Ever since BA and Iberia were sold by their shareholders to the new holding company , IAG, the Chief Executives of the two brands, Keith Williams and Luis Gallego, had sat on the IAG Board where their role was both to further the interests of the new company and to represent and even champion those of their respective wholly owned "companies". BA and Iberia also had non executive chairmen, Sir Martin Broughton and Antonio Vazquez respectively. That structure is now abandoned.
The carefully, -some would say cleverly,- worded anouncement devotes its leading paragraph to Broughton and Vazquez relinquishing their Chairman roles so as to focus on their IAG functions as Deputy Chairman and Chairman respectively. So far so good.
The second paragraph is also encouraging although not for students of corporate governance who believe the two roles should always be separated. Williams and Gellago ,now free of a Chairman sitting on their shouders, will each add that to their CEO roles. In theory not having an IAG board member sitting on their own boards might give each more independence to define their own futures and run their own businesses.
The rub though comes in the third paragraph. Having achieved "promotion" within their own brands ,Williams and Gallego will now lose their seats on the IAG board. This means that they are no longer able to represent their brands on it. They now are now reduced to being supplicants who will have to present for consideration and approval their strategies, plans and performance records. BA and Iberia will in reality have less independence and input to and control over their own destinies. The allocation of investment, aircraft and other resources will be even more controlled from the centre than it has been so far. The real power in the group now becomes more concentrated than ever in the hands of IAG which really means just three people,- Willie Walsh (the main driver), Antonio Vazquez and Martin Broughton. The other (nine) members of the twelve member Board can be expected to be less significant players. The brands themselves simply aren't now at the top table.
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