PLAYING at London’s National Theatre at present is Tom Stoppard’s trilogy, the Coast of Utopia. The three plays are called Voyage, Shipwreck, and Salvage. Sir Christopher Hogg knows them well. He is chairman of the theatre’s board.
The trilogy could well be an allegory for Hogg’s life. A charmed voyage through the business world has suddenly turned into shipwreck. As chairman of the drinks giant Allied Domecq he has incurred the City’s wrath for the botched sale of the group’s 3,500 pubs. As chairman of Reuters he has watched business drain away and the share price fall by 90%. Now, as chairman of GlaxoSmithKline, he is under attack for hiking the chief executive’s pay package despite the drugs company going into decline.
Hogg, 66, comes from the old school that studies a problem long and hard, thinks deeply and then reveals the brilliant solution. He has spent his life doing that, but today’s City cannot wait - it wants the answers now - and if Hogg cannot deliver them, investors want someone who can.
Nobody doubts that Hogg is clever. Having studied English at Trinity College, Oxford, he popped to Harvard to take an MBA then flew back to Lausanne to attend the Imede Business School before joining Hill Samuel when it was still a leading City merchant bank.
These were the days of the white heat of Harold Wilson’s technological revolution and Hogg wanted to be part of it. The Socialist prime minister established his own Industrial Reorganisation Corporation, a state merchant bank to engineer mergers between inefficient private companies.
It was headed by Labour-supporting Frank Kearton, head of the Courtaulds textile group that had recently fought off a takeover from ICI. Hogg was recruited and Kearton later recruited his protg into Courtaulds.
The textile industry was in ruins, with mills closing every week as cheap imports undercut domestic output. Hogg turned it round, working his way up as chief executive and then chairman. He hung on as non-executive chairman until 1996 to complete a 28-year stint, during which time he demerged Courtaulds into two independently-quoted companies - and continued to head both.
Good at spotting talent, he recruited Martin Taylor, a columnist on the Financial Times, who had frequently quizzed him on Courtaulds, and made him chief executive. It launched a boardroom career that took Taylor to the top of Barclays Bank and now WH Smith. Hogg was now ready to take on other interests, too.
In the public sector he spent the 1970s as a department of trade adviser, became a director of the Bank of England and sat on the panel to select the current BBC chairman. When Reuters floated in 1984, Hogg became a director and within a year was chairman.
With both Rupert Murdoch and the late Robert Maxwell on his board, Hogg learned how to keep order. When Murdoch lifted his shareholding from the maximum 15% to 23%, the chairman forced the press baron to sell down. When Maxwell failed to turn up at board meetings or arrived late, Hogg delivered reprimands.
Reuters was in the ascent, busily transforming its news agency into a hi-tech dealing and financial information service. Hogg was on the up. As his reputation spread he was invited to the board of SmithKline Beecham - and GlaxoSmithKline after the merger - plus Allied Domecq, the Teacher’s whisky and Beefeater gin group.
Within a year he was made Allied Domecq’s chairman. But when rivals Guinness and GrandMet announced their Diageo merger, Hogg’s company appeared to lag. There was speculation he would merge with Seagram, but the Canadian drinks competitor was mired in its own takeover of the Polygram music company. Instead - after his trademark long think - Hogg decided to shrink rather than expand the company out of trouble.
While no one doubted his strategy of selling the company’s entire estate of 3,500 pubs, his execution of the deal attracted severe criticism. Shareholders considered the arrangement with Whitbread too cosy. Hogg stuck doggedly to it despite Hugh Osmond’s Punch Tavern intervening with a better offer.
The result was a vitriolic three-way battle, fought via press advertising - an old practice banned by modern takeover rules but permitted because neither the pubs nor Punch were quoted. Osmond’s 2.8bn bid won the day and Hogg’s reputation dimmed.
His voyage started heading for shipwreck, although Allied’s shares remained strong in a falling market until he called time this summer. "I will have completed six years as chairman and I told my board colleagues some time ago that I wanted to retire at this stage," he announced. But within two months Hogg moved up the boardroom table to become chairman of Glaxo. His dark hair and strong features may belie his age, but for a pensioner to replace a man five years younger than himself did not look like good succession-planning.
Characteristically, Hogg has spent his first months meeting executives and studying the company. But as he did so, the in-tray of problems mounted and the shares fell to almost half their peak.
The City is worried. Patents on key Glaxo drugs are expiring and it wants to know what new products are in the offing. The chairman is still silently climbing his learning curve while chief executive Jean-Pierre Garnier is ensconced in his adopted America.
Investors fear Garnier is running the show without communicating to them or his co-directors, and that Hogg has lost control. Now they find the chairman is backing a remuneration package worth 18m that will almost double the entire package of the already highly-paid Garnier. The National Association of Pension Funds, among others, wants the deal blocked. Hogg’s head is on the block.
Glaxo is taking more of Hogg’s time when he needs more for solving Reuters’ troubles. Investors fear that he can do neither job properly. Reuters has been hit by stiff competition from nimbler rivals such as Bloomberg. Years of complacency are said to have left the company too vulnerable.
The third of Stoppard’s plays is Salvage. If Hogg is to complete the trilogy he must act decisively if shipwreck is to be avoided. His Reuters job is all but lost and his position at Glaxo is growing increasingly insecure. His appointment looked an interim move at the time. The Garnier pay row might make it shorter still.