19 July 2009
Attendance in UAE boardrooms is getting leaner, with a number of top executives having been shown the door in recent times. Along with that, however, there is a shift in the balance of power in the boardroom.
With declining revenues and dried-up credit lines, cost control is becoming the most important driving force for an organisation's survival today, and that is leading to change in the profile of the CEO. As more and more companies realise how bad their corporate balance sheets are, CEOs are evolving into CFOs in a bid to shore up finances and control the organisation's cost structure.
As financial skills start getting valued more highly, an increasing number of CFOs will make it to the corner office. Recession, credit crunch and the complex nature of companies will all play a role in deciding the change in the CEO's profile.
"We're tending to see that CEOs that are being hired now are more accountancy-based or those who have been CFOs in the past," said Ian Guilianotti, Associate Director, HRM Consulting at Nadia Recruitment. "In the past, it's been all about growth; now, it's about consolidation and cost-efficiency - and these are two very different functions," he said.
"A greater awareness of cost control and financial issues has become far more relevant to many CEOs in comparison to the past few years," agreed Siobhan O'Reilly, Recruitment Manager at BAC Middle East.
"Real estate and construction are the two sectors that have borne the brunt of the credit crunch in the local market, and it is in these sectors that top executives have faced the most pressure from owners, shareholders and board members," she said.
Indeed, Emirates Business research of some of the more high-profile cases involving CEOs, directors and board members in the UAE reveals that real estate and financial sector executives are particularly vulnerable to falling prey to this new trend.
Aldar Properties, Abu Dhabi's largest real estate developer, said in October last year it was replacing the company's CEO Ronald Barrott with COO John Bullough. "Following the exponential growth of its project footprint over the past three years, the new leadership structure is a reflection of a required focus on execution and project delivery," the company had then said in an e-mailed statement.
"Growth still remains a priority. However, our obligation and focus are necessarily now about executing against the opportunities that have been built for our shareholders, customers and partners," said Aldar Chairman Ahmed Al Sayegh in the statement.
Steve Mullins, nominated as the CEO of National Bank of Fujairah (NBF) effective May 2008, and who joined the bank from Ahli Bank of Qatar, survived on the hot seat for a little over six months. Mullins was unceremoniously packed off in November 2008, and the bank chose to not assign any reason for his departure.
The announcement, incidentally, came just over a week after NBF announced that its third-quarter profits fell 213 per cent year-on-year from Dh76.25 million in Q3 2007 to a loss of Dh86.53m Q3 2008.
Easa Saleh Al Gurg, Deputy Chairman of NBF, had then said: "NBF is an ambitious bank. Our potential is unmatched and we are uniquely positioned to develop from our strong position among the UAE banking community to be a bank of great substance and critical mass.
"We will now conduct a thorough search to find an individual who shares this vision and ambition," suggesting that Mullins might have failed to share the bank's internal goals and aspirations.
In January this year, Khalifa Mohammed Al Kindi resigned as the chairman of National Bank of Abu Dhabi (NBAD), again without assigning any reason for the move. While Al Kindi might have actually moved to devote more time to his position as chairman of the government-owned Abu Dhabi Investment Council, another bank in the emirate, Abu Dhabi Commercial Bank (ADCB), too saw its CEO Eirvin Knox exiting earlier this year.
The list, however, starts getting really populated since May this year, after the global economic turmoil started taking a toll on the bottom line of local companies in earnest. Not taking into account individuals suspended for charges of corruption or embezzlement, there have been some high profile resignations in the recent past.
On May 5, the Shariah-compliant Ajman Bank relieved its CEO Yousif Saleh Khalaf of duty and promoted Deputy CEO Ali E Aishaqoosh Al Mueen as Acting CEO of the bank.
A month-and-a-half later, on June 25, the bank announced the collective resignations of a number of its top management staff, including Kamran Khalil, Head of Operations; Abdul Rahman Mustafa, Head of Credit, Risk and Compliance; Hesham Mohamed Youssef, Head of Corporate Banking; and Said Wafai, Head of Strategic Corporate Affairs. Last week, the bank also announced a reshuffle among some of its other top executives.
Simon Azzam of Union Properties (UP), after spending 23 years as CEO of the company, resigned from his position on June 14, a month or so after the property developer announced an 87 per cent fall in its first quarter profits. UP's profits fell from Dh238.35m in Q1 2008 to Dh30m in Q1 2009, against projected profits of Dh200m by EFG-Hermes, according to a Reuters survey.
Sulaiman Al Fahim of Hydra Properties, arguably the most media savvy CEO to have been let go, was ostensibly "promoted" for all the good work he had done in his three years at the helm of the Abu Dhabi developer. The company, however, was under tremendous pressure from investors as its landmark Hydra Village projects was more than two years behind schedule.
Ghassan Sakhnini, CEO of Tameer Holdings, resigned from his position on May 19, citing "personal reasons".
The company has since dissolved joint ventures with Sorouh for a couple of real estate projects, and is believed to be re-evaluating plans in light of the financial crisis.
Of course it isn't just companies in the banking and real estate sectors that have seen their top management being pushed out. Although last week's news that the Abu Dhabi-listed Methaq Takaful Insurance Co has let go two of its board members, Abdullah Al Qubaisi and Abdullah Al Junaibi, only adds to the growing list, analysts believe that the list is only going to get lengthier going forward.
On the move
Oct 12, 2008: Ronald Barrott, CEO, Aldar Properties, is replaced by COO John Bullough. Barrott became an advisor to the chairman and remains a member of the Aldar board.
Nov 16, 2008: Steve Mullins, CEO, National Bank of Fujairah, steps down. NBF appoints Tim Goddard and Christopher Taylor as joint interim CEOs. Michael J Connor appointed as Acting CEO on April 29, 2009.
Jan 5, 2009: Khalifa Mohammed Al Kindi, Chairman, National Bank of Abu Dhabi, resigns. He is replaced by Nasser Ahmad Khalifa Alsowaidi.
Feb 4, 2009: Eirvin Knox, CEO, Abu Dhabi Commercial Bank, resigns. ADCB appoints Ala'a Eraiqat, previously Deputy CEO, as the new chief executive.
May 5, 2009: Yousif Khalaf, CEO, Ajman Bank, is relieved of his position effective April 30, 2009. The bank appointed Ali E Alshaqoosh Al Mueen as the Acting CEO on May 3, 2009.
May 19, 2009: Ghassan Sakhnini, CEO, Tameer, resigns citing personal reasons. No successor is announced.
June 14, 2009: Simon Azzam, CEO, Union Properties, resigns. The company appoints Khaled Al Jarwan as General Manager.
June 16, 2009: Sulaiman Al Fahim, CEO, Hydra Properties, replaced by Ali bin Sulayem from Royal Group, Hydra's parent company.
June 25, 2009: Ajman Bank announces collective resignations of the following with effect from June 30:
- Kamran Khalil, Head of Operations
- Abdul Rahman Mustafa, Head of Credit, Risk and Compliance
- Hesham Mohamed Youssef, Head of Corporate Banking
- Said Wafai, Head of Strategic Corporate Affairs
The bank later announces a senior management reshuffle on July 8.
July 5, 2009: Abdullah Al Qubaisi and Abdullah Al Junaibi, Board Members, Methaq Takaful Insurance Co., voted out by shareholders at the AGM. Sheikh Abdullah Bin Naser Al Thani and Raafat Al Ward have replaced them, the company said.
Attendance in UAE boardrooms is getting leaner, with a number of top executives having been shown the door in recent times. Along with that, however, there is a shift in the balance of power in the boardroom.
With declining revenues and dried-up credit lines, cost control is becoming the most important driving force for an organisation's survival today, and that is leading to change in the profile of the CEO. As more and more companies realise how bad their corporate balance sheets are, CEOs are evolving into CFOs in a bid to shore up finances and control the organisation's cost structure.
As financial skills start getting valued more highly, an increasing number of CFOs will make it to the corner office. Recession, credit crunch and the complex nature of companies will all play a role in deciding the change in the CEO's profile.
"We're tending to see that CEOs that are being hired now are more accountancy-based or those who have been CFOs in the past," said Ian Guilianotti, Associate Director, HRM Consulting at Nadia Recruitment. "In the past, it's been all about growth; now, it's about consolidation and cost-efficiency - and these are two very different functions," he said.
"A greater awareness of cost control and financial issues has become far more relevant to many CEOs in comparison to the past few years," agreed Siobhan O'Reilly, Recruitment Manager at BAC Middle East.
"Real estate and construction are the two sectors that have borne the brunt of the credit crunch in the local market, and it is in these sectors that top executives have faced the most pressure from owners, shareholders and board members," she said.
Indeed, Emirates Business research of some of the more high-profile cases involving CEOs, directors and board members in the UAE reveals that real estate and financial sector executives are particularly vulnerable to falling prey to this new trend.
Aldar Properties, Abu Dhabi's largest real estate developer, said in October last year it was replacing the company's CEO Ronald Barrott with COO John Bullough. "Following the exponential growth of its project footprint over the past three years, the new leadership structure is a reflection of a required focus on execution and project delivery," the company had then said in an e-mailed statement.
"Growth still remains a priority. However, our obligation and focus are necessarily now about executing against the opportunities that have been built for our shareholders, customers and partners," said Aldar Chairman Ahmed Al Sayegh in the statement.
Steve Mullins, nominated as the CEO of National Bank of Fujairah (NBF) effective May 2008, and who joined the bank from Ahli Bank of Qatar, survived on the hot seat for a little over six months. Mullins was unceremoniously packed off in November 2008, and the bank chose to not assign any reason for his departure.
The announcement, incidentally, came just over a week after NBF announced that its third-quarter profits fell 213 per cent year-on-year from Dh76.25 million in Q3 2007 to a loss of Dh86.53m Q3 2008.
Easa Saleh Al Gurg, Deputy Chairman of NBF, had then said: "NBF is an ambitious bank. Our potential is unmatched and we are uniquely positioned to develop from our strong position among the UAE banking community to be a bank of great substance and critical mass.
"We will now conduct a thorough search to find an individual who shares this vision and ambition," suggesting that Mullins might have failed to share the bank's internal goals and aspirations.
In January this year, Khalifa Mohammed Al Kindi resigned as the chairman of National Bank of Abu Dhabi (NBAD), again without assigning any reason for the move. While Al Kindi might have actually moved to devote more time to his position as chairman of the government-owned Abu Dhabi Investment Council, another bank in the emirate, Abu Dhabi Commercial Bank (ADCB), too saw its CEO Eirvin Knox exiting earlier this year.
The list, however, starts getting really populated since May this year, after the global economic turmoil started taking a toll on the bottom line of local companies in earnest. Not taking into account individuals suspended for charges of corruption or embezzlement, there have been some high profile resignations in the recent past.
On May 5, the Shariah-compliant Ajman Bank relieved its CEO Yousif Saleh Khalaf of duty and promoted Deputy CEO Ali E Aishaqoosh Al Mueen as Acting CEO of the bank.
A month-and-a-half later, on June 25, the bank announced the collective resignations of a number of its top management staff, including Kamran Khalil, Head of Operations; Abdul Rahman Mustafa, Head of Credit, Risk and Compliance; Hesham Mohamed Youssef, Head of Corporate Banking; and Said Wafai, Head of Strategic Corporate Affairs. Last week, the bank also announced a reshuffle among some of its other top executives.
Simon Azzam of Union Properties (UP), after spending 23 years as CEO of the company, resigned from his position on June 14, a month or so after the property developer announced an 87 per cent fall in its first quarter profits. UP's profits fell from Dh238.35m in Q1 2008 to Dh30m in Q1 2009, against projected profits of Dh200m by EFG-Hermes, according to a Reuters survey.
Sulaiman Al Fahim of Hydra Properties, arguably the most media savvy CEO to have been let go, was ostensibly "promoted" for all the good work he had done in his three years at the helm of the Abu Dhabi developer. The company, however, was under tremendous pressure from investors as its landmark Hydra Village projects was more than two years behind schedule.
Ghassan Sakhnini, CEO of Tameer Holdings, resigned from his position on May 19, citing "personal reasons".
The company has since dissolved joint ventures with Sorouh for a couple of real estate projects, and is believed to be re-evaluating plans in light of the financial crisis.
Of course it isn't just companies in the banking and real estate sectors that have seen their top management being pushed out. Although last week's news that the Abu Dhabi-listed Methaq Takaful Insurance Co has let go two of its board members, Abdullah Al Qubaisi and Abdullah Al Junaibi, only adds to the growing list, analysts believe that the list is only going to get lengthier going forward.
On the move
Oct 12, 2008: Ronald Barrott, CEO, Aldar Properties, is replaced by COO John Bullough. Barrott became an advisor to the chairman and remains a member of the Aldar board.
Nov 16, 2008: Steve Mullins, CEO, National Bank of Fujairah, steps down. NBF appoints Tim Goddard and Christopher Taylor as joint interim CEOs. Michael J Connor appointed as Acting CEO on April 29, 2009.
Jan 5, 2009: Khalifa Mohammed Al Kindi, Chairman, National Bank of Abu Dhabi, resigns. He is replaced by Nasser Ahmad Khalifa Alsowaidi.
Feb 4, 2009: Eirvin Knox, CEO, Abu Dhabi Commercial Bank, resigns. ADCB appoints Ala'a Eraiqat, previously Deputy CEO, as the new chief executive.
May 5, 2009: Yousif Khalaf, CEO, Ajman Bank, is relieved of his position effective April 30, 2009. The bank appointed Ali E Alshaqoosh Al Mueen as the Acting CEO on May 3, 2009.
May 19, 2009: Ghassan Sakhnini, CEO, Tameer, resigns citing personal reasons. No successor is announced.
June 14, 2009: Simon Azzam, CEO, Union Properties, resigns. The company appoints Khaled Al Jarwan as General Manager.
June 16, 2009: Sulaiman Al Fahim, CEO, Hydra Properties, replaced by Ali bin Sulayem from Royal Group, Hydra's parent company.
June 25, 2009: Ajman Bank announces collective resignations of the following with effect from June 30:
- Kamran Khalil, Head of Operations
- Abdul Rahman Mustafa, Head of Credit, Risk and Compliance
- Hesham Mohamed Youssef, Head of Corporate Banking
- Said Wafai, Head of Strategic Corporate Affairs
The bank later announces a senior management reshuffle on July 8.
July 5, 2009: Abdullah Al Qubaisi and Abdullah Al Junaibi, Board Members, Methaq Takaful Insurance Co., voted out by shareholders at the AGM. Sheikh Abdullah Bin Naser Al Thani and Raafat Al Ward have replaced them, the company said.
By Vicky Kapur
© Emirates Business 24/7 2009
