View from City Road: A bad start for Mr Forte
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Your support makes all the difference.Fifty-eight years after opening their first milk bar, Lord Forte and his co-founder Eric Hartwell are bowing out of the Forte boardroom, along with two other non-executives and two executive directors. The average age of the departing directors is 71. The older generation is belatedly handing over to the younger one, led by Rocco Forte, who has, in theory at least, been chief executive for 10 years and chairman for seven months. Only now is he able to tighten his grip on the business.
Shareholders now must concentrate on the commercial ability of Mr Forte.
Not only does he occupy the top jobs in the boardroom but increasingly he is taking control of the operating businesses. In the annual report, out yesterday, he has announced the formation of a chairman's committee consisting of Alan Hearn, the director in charge of hotels, and Bob Lienhard, who is responsible for strategy and development but not even on the board.
Mr Forte promises further change which, he says, will bring the centre closer to the operating businesses. This suggests Mr Forte is going to be actively involved in running the divisions.
Though the presence of Sir Anthony Tennant (ex-Guinness), Sir Paul Girolami (Glaxo) and Alan Wheatley (ex-Price Waterhouse), offers some comfort to shareholders about the conduct of the board, it does not fill the hotels. It is up to the executives to do that.
So far Mr Forte's record is at best mixed. The company has cut its dividend for the first time in 20 years, announced huge write-downs and got into a mess over sale negotiations of Gardner Merchant. (Not helped by the disclosure that Garry Hawkes, who was on the Forte board and was part of the buyout team, received an incentive payment of pounds 175,000 after the sale). Forte suffered a cash outflow of pounds 100m from its continuing businesses last year. Finance remains a worry, despite a scrip dividend.
Recovery may yet allow Mr Forte to improve on this record. But he has not had an auspicious start.
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