Richard Giordano, American born and bred, was renowned for years as the best paid business executive in Britain, and respected as one of the shrewdest. He helped transform British Oxygen (BOC) into a world leader and recast the old Gas Board conglomerate into a group of successful modern businesses.
But Giordano, who has died aged 88, will be remembered also for a miscalculation – precipitating huge “catch-up” executive pay rises at British Gas. They led to one of the biggest AGM protests over “fat-cat” pay, with union demonstrations and the pillorying of his unfortunate chief executive, Cedric Brown, as “Cedric the pig”.
Richard was born in New York, one of three children of Italian immigrants, Vincent, a tailor, and Cynthia (nee Cardetta). “Ambition,” he said, “came as part of the decor.” After Harvard University and Columbia Law School, Dick joined a Wall Street law firm, Shearman and Stirling, in 1959. But in 1963, finding life “too predictable”, he left for a client, the industrial gases business Airco.
Within four years he was running half its operations, becoming chief operating officer at the age of 37. He was promoted to chief executive in 1978 but was hit almost immediately by a takeover bid from a shareholder, British Oxygen, seeking an international platform to widen its traditional imperial base.
Giordano eventually lost a bitterly fought battle, and prepared himself to take time off for his hobby of ocean sailing. Instead he was offered the task of running BOC by its shrewd chairman, Sir Leslie Smith, at a salary in excess of any other UK chief executive. He was surprised by what he found: demoralised managers, lack of control over subsidiaries, overmanning and unions with lots of power – a “them and us” mentality. “People seemed to think,” he told one interviewer, “that their main mission was job-creation.”
With Smith’s backing, he acted swiftly, imposing central controls and communicating directly with the workforce while cutting numbers and BOC’s fabled management perks. “If you’re seen to be enjoying privileges, there’s something wrong.” The company bar went, along with peripheral businesses including a trout farm and a pizza manufacturer.
Under pressure from recession caused by the oil price rise Giordano drove change, targeting investment to fast-growing markets, with a major new plant in South Carolina. The unions, not consulted, complained that he was turning BOC into an American company. By February 1982, Smith was defending a 76% increase in Giordano’s salary – to £477,000 – by pointing to a 50% increase in pre-tax profits to £93m, 80% from outside Britain. BOC became the most international of industrial gas companies, and world number two.
In his 13 years as chief executive and then chairman, the group averaged an annual 20% growth in profits and share price, and Giordano became the first UK chief executive to be paid more than £1m a year. There were blunders – sticking with underperforming businesses – but BOC was perceived as a success story and Giordano, who received an honorary knighthood in 1989, as a particularly analytical strategist. Nigel Lawson, the former chancellor of the exchequer, called him, “an outstanding businessman, very clear and decisive”. Others noted another characteristic, obsessive concern about high pay for high performance, not just for himself but for those who worked for him.
He was imposing; 6ft 3in with a gravelly voice, a perma-tan enhanced by summers spent in his house in Connecticut, and a disarming sense of humour. Senior directors praised his management of the board – though sometimes over-dominant, he paid close attention to, and did not overrule, his non-executives.
Inevitably in demand for his business skills, he became deputy chairman of both Rio Tinto and Grand Met, and was once tipped as the government choice to take over at British Rail. Much was therefore expected when in 1994 he was appointed chairman of British Gas, succeeding the low-profile Robert Evans.
One of the first Thatcher privatisations, it had been sold off largely intact – unlike other monoliths, such as electricity and railways, which had been deliberately split up. It retained much of the form and too many of the practices of the old Gas Board, plus a mass of small shareholders and customers that kept it in the public eye.
Giordano took his time deciding his overall strategy while widespread job-cuts and an erratic new computer system provoked complaints about customer service. So when predictably he raised executive pay, with Brown’s remuneration jumping by 75% to £475,000 (partly through incorporating a bonus), the roof fell in. Customers protested and unions staged demonstrations outside the AGM with a live pet pig.
Giordano won plaudits for the cool way he chaired the marathon meeting, ruling out a vote of confidence on legal grounds. But Brown’s family home was staked out by the media, and the debacle signalled a spectacular failure of Giordano’s political antenna. As the storm gathered, he first declined to respond, then blamed the politics of envy, only later conceding that, “we didn’t grasp where British Gas fitted into the community and the culture. We should have left it [executive pay] alone.”
Brown was gone within a year, and Giordano took on his role as well, soon resuming normal service with major strategic change, first splitting the company into two in 1997 – a services arm, branded Centrica, and transportation and exploration labelled BG plc– and then making a further division in 2000, separating transportation and pipelines into Lattice, later to merge with National Grid. All three companies subsequently prospered.
Giordano, meanwhile, still courted controversy by having half his salary paid in dollars and by demonstrating a willingness to dispose of executives he thought not up to the mark. In 2002, he took British citizenship, but continued to spend much of his time in New England. After announcing his retirement in 2003, with payments which would provide for an office, secretary and chauffeur for five years, he declared: “My pay has always attracted magnetic media attention. But as far as I am concerned, I’ve earned it.”
He is survived by his third wife, Marguerite (formerly Rule Johnstone), whom he married in 2002; and by a son, Richard, and two daughters, Susan and Anita, from his first marriage, to Barbara Beckett in 1956, which ended in divorce in 1993. His second wife, Susan Ware, died in 2001, a year after their marriage.
