Jim Armitage: The inside story of Phiz’s departure from TP Icap

“Phiz” as the former Lehman Brothers and Nomura banker is known, was fired on Monday: AFP/Getty Images
“Phiz” as the former Lehman Brothers and Nomura banker is known, was fired on Monday: AFP/Getty Images

For all the gleeful chants of “he’s going home” in the TP Icap dealing room at chief executive John Phizackerley’s demise, investors should be concerned over the manner of his departure. For, as in most coups d’état, there is more than one side to the story.

“Phiz” as the former Lehman Brothers and Nomura banker is known, was fired yesterday, with the company briefing that he had effectively lost the dressing room.

Since merging his old firm Tullett Prebon with Michael Spencer’s Icap, he had tough cost savings targets to reach. The goals boosted the share price, but meant the chief executive had to shed hundreds of staff.

Unpopular though this made him among staff, his friends say, it was what shareholders wanted. Any chief executive would have done the same.

In yesterday’s statement, the company lowered its cost savings target, saying it now had to invest more to secure its long-term future.

It gave the impression this was a fresh idea to be imposed by new chief executive Nico Breteau and new finance director Robin Stewart — both internal promotions.

The problem with that version of events is that Phizackerley’s team presented a near-identical investment strategy to the board on June 20. His friends say the only substantial difference was that he did not cut the cost savings target (the key reason for yesterday’s 36% plunge in the shares).

The plan, and Phizackerley, was given the board’s support.

Peculiarly, some familiar with events say, it was also agreed that an external finance director would soon be appointed. It seems the internal candidate, Stewart, was not seen as the right man for the job. A decision was to be made from a shortlist of two tomorrow.

Rather than any strategic differences of opinion, it seems the key issue which cost Phizackerley his job was pay. He had complained his package fell last year despite his outperforming the market.

The board had countered that his long-term “LTIP” bonus scheme would make up for it. He disagreed, saying the LTIP was likely to come out at just £4 million or so, and only then vesting by 2023. Not much, considering predecessor Terry Smith regularly pulled in £4 million a year and Howard Lutnick at rival BGC got $15 million (£11 million) last year.

At the June 20 meeting, I’m told remuneration committee chairman Stephen Pull agreed the LTIP was not fit for purpose and promised to fix it. However, somewhere down the line, chairman Rupert Robson decided not to, dinging the troublesome CEO instead. Problem ducked.

Robson is retiring, so shareholders will be left with a company in turmoil with a new chairman, a new chief executive and a new finance director. What does remuneration head Pull think of it all? Little matter. He’s also off in six months.

Traders may be cheering, but investors less so.

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