Executive headhunter and CEO agent Martin Armstrong is not one of those people who believes chief executives of major public companies are paid too much writes Colm Keena.
In fact, the Sussex-based Dubliner says top people in private equity houses, investment banks, and hedge funds often get paid far more than the "fat cat" public company directors who are frequently the subject of criticism in the press.
The salaries earned by the executive directors of public companies are reasonable "as long as they are providing for shareholders".
What does get his goat, however, is senior executives who fail to perform but who still get huge remuneration packages. Likewise he "abhors" the practice whereby senior executives who are sacked or resign because they have failed are given huge "parachute payments".
This sort of practice happens when a company has a lazy or ineffective board, a phenomenon that was all too common in the UK, he believes, but which may now be changing courtesy of the Higgs Report.
The January 2003 Higgs Report, written for the UK's Department of Trade and Industry, is focused on improving the effectiveness and independence of independent or non-executive directors. It contains a number of recommendations, such as restricting the number of Footsie 100 boards on which a director can sit.
The report is, in part, aimed at undermining the cosy club of directors who would pop up all over Footsie 100 boardrooms, looking after each other and rarely asking a difficult question. The cosy situation was reflected by the practices of headhunting companies, Mr Armstrong says, who would draft lists of senior executives and directors who were known to be friendly with each other and who might be interested in appointing each other to various positions.
Mr Armstrong declines to comment when asked what he thinks of the Irish boardroom scene, though he does have some knowledge of the Irish financial sector. He says he would like to see the sort of changes that are beginning to sweep through the UK to also sweep through corporate Ireland.
Mr Armstrong has been involved in the corporate world in the UK since leaving Dublin for London in 1983. He had spent a few years as bass player with a rock band, Nine out of Ten Cats, playing gigs in places such as the Baggot Inn, but "musical differences" brought an end to that phase of his career.
In London he began working with a recruitment firm. His father, a Dublin businessman in the textile sector, advised him to get involved in the higher margin end of the sector, and he began specialising in recruitment in London's financial district.
He found himself specialising in recruiting stockbrokers around the time the Big Bang was starting in London. By the age of 26 he was acting for Goldman Sachs, working on recruiting its entire team for its new European equities business.
"I was their outside supplier for staff in Europe. I stole their business philosophy, learned US business principles, copied them. That's how I learned."
He moved to New York and opened a branch of his own company, Armstrong International, doing more recruitment work for Goldman Sachs, recruiting for hedge funds, working for a number of large high-net-worth investors.
Assessing talent in the financial sector is an analytical process, he says. There are lots of data available and headhunters draw up lists of CEOs in the various sectors, their heirs apparent, using various performance measures. There is a model for building up a skills profile, which mostly involves "hard" measurement but also involves two "soft" factors, "shared values" and "style". It is often these issues which are key to the assessment of a person's leadership potential.
In Mr Armstrong's world, JEDI stands for judgment, empathy, drive and intelligence - attributes that are found, he believes, in all great leaders. The divide, he says, is between empathy-driven leaders and judgment-driven leaders. The former tend to be good team people, the latter people who are admired from a distance. He cites Margaret Thatcher as an example of the latter and speculates as to whether Bertie Ahern would be a good example of the former.
In general, he says, empathy-driven leaders are more likely to do well, but judgment-driven leaders, confident of their own ideas and vision, are more likely, when successful, to be extremely successful. They are also, he believes, more inclined, even when very successful, to eventually "fall off their perch".
In 1999, Mr Armstrong, who had by then returned to England, set up Skill Capital, an executive search firm providing management teams to buy-outs in Europe. His client list includes funds such as Permira, Cinven, Candover and Blackstone.
More recently, he has set up the Armstrong Management Group, a business that represents CEOs of major companies, giving advice and support in such areas as remuneration, media relations, and career development.
The firm gets 15 per cent of the after-tax income arising from any remuneration rise in which it has been instrumental.
Mr Armstrong is married to Rose Fanshawe, daughter of former master of the Galway Blazers, Brian Fanshawe. He was in Dublin this week, taking time out to do an interview with The Irish Times, hoping to raise his profile and net some Irish chief executive clients.
