An Interview with Steven Fine, Chief Executive of Peel Hunt

Ninder: Who are you, what does Peel Hunt do and what are the NED Awards?

Steven: I am Steven Fine, Chief Executive of Peel Hunt. Peel Hunt is a UK focused specialist Investment Bank and our main area of focus is on UK Public and Private Companies. We act as a retained Corporate Adviser to 153 public companies; we write and publish research on some 400 UK listed public companies. Therefore, we have a very comprehensive joined up picture of the UK Public market space. As a consequence of that, we are dealing with boards all the time and what we found some 14 years ago was the opportunity to start an Awards, to recognise Governance, Oversight, Stewardship, Best Practice was actually missing and could we do it in an effective fashion where we could properly and appropriately reward or recognise those who had contributed something quite special in those key areas. 

When you set the awards up in 2006, how did people react?

If I am candid, in 2006, the world was very different. This was pre the GFC (Global Financial Crisis) and, I found the awards were actually nothing special. NEDs at the time were seen to be nodding dogs, where the execs made the decisions and non-execs just sort of blessed them. It was what it was and those were different times. 

The key change occurred after the financial crisis where we realised we had something pretty interesting. We decided to look for additional sponsors who we felt could help take these awards onto the next level - sponsors who had a different ‘perspective’ on the role of the Non-Exec that all had something slightly different and perhaps a bit unique to bring to the table. That then led to a far greater focus on Diversity and Inclusion.

So how did you decide that somebody makes a good judge?

I think the key is that a diverse group of individuals sitting around a table can actually outperform expert matters in any area. I think it’s really important, that as long as you get the diversity right – we have a combination of past winners, sponsors, individuals from the public sector rather than the private sector (we even had Frances O’Grady as a judge from the Trade Union Congress), and that you get those different perspectives. I think that goes to the heart of what we are trying to do here. 

I am probably most proud of the fact that winners of these awards genuinely feel that they have won something quite special. That is a really good reflection on the hard work and effort that we put in to ensure the process is rigorous, tough and not easy to win. 

What do you think has changed since you founded these awards? How has the role of the Non-Executive Director really changed?

I think the consequence of the Global Financial Crisis has seen an extraordinary focus on regulation and when you focus on regulation, there has to be accountability and when you have accountability, it’s not just on the execs, it becomes a board issue. If the board are then accountable - whether personal liability or connected liability - if there is accountability, you have to take these things very, very seriously. Now this builds up and whilst there have always been strong non-execs even before the financial crisis, since then, it’s been almost a quantum leap in terms of focus on what a non-exec actually does, how they operate and what they bring to the table.

So, what do you think NEDS will have to face between now and the next five years? 

I think it is going to become a tougher environment. Probably one of the best examples I can give is that the pandemic highlighted companies’ overreliance on debt. We have grown up on a debt binge for the last ten to fifteen years, and I think the pandemic highlighted that you could be on the board of a company that can have zero revenue for a reasonably large number of months. If you are on the board of those companies, you are going to sit there and think, ok, look, we have managed to restructure our debt, banks and government have been quite helpful. However, would we rather have more equity in five years’ time than debt than we have now? I imagine the answer to that is probably: Yes. So, I think the focus of non-executives is going to shift slightly towards how the business is run and how the balance sheet is structured, much more so than it ever has been in the past. I am not saying that any regulatory issues are going to subside, if anything, I think they are probably going to increase over time as well, so the accountability and the onus put on the non-execs, I think, is going to increase substantially. 

In addition, people are looking now towards the non-execs almost from a societal perspective. I would be interested in what you think on whether you need a board that now understands change and innovation because we are facing an uncertain future? 

Culture and conduct have been huge areas of focus from the regulator. The new buzzword coming is this focus on Operational Resilience and again, I think that is a consequence of the Covid pandemic as well. Operational Resilience covers a whole host of issues. Therefore, I think to understand that concept and be on top of that concept, and mix that in with a culture of a firm as well, I think it is going to be very, very important. I think the onus of non-Execs is to be on top of a broader suite of their knowledge base and operational understanding. You have to know what is happening. 

You spoke about Operational Resilience - Do you think going forward, a NED has to not just look after investors, but also the wider stakeholder as well?

Yes, I couldn’t agree more. I think the NEDs are there to protect all stakeholders. If you go back to the pre Global Financial Crisis, it was really more to support the growth, revenues or profits or whatever it was for the company. Over the last thirteen/fourteen years, it has broadened much more, so I think the important thing there is the diversity of, I suppose, oversight, the NED has to have for all aspects of the business.

One of your awards is the Dame Helen Alexander ‘NED to Watch’ award. Who was Dame Helen Alexander and what is so special about this particular award? 

So, one of the most coveted roles in the NED Awards is the Chairman of the judging panel. I have been incredibly fortunate to work with people like Sir John Parker, Sir Roger Carr, Dame Helen Alexander and now Paul Drechsler. Dame Helen, founder of the Hampton Alexander review on Diversity, was a real force for good. Sadly, Dame Helen passed away and we thought that it was appropriate to recognise her and the contributions she’s made to the issue of diversity by giving an award in her name. We felt that the ‘NED to watch’ would reflect her contribution appropriately, it has actually been a really interesting award to watch it grow and flourish, and the quality of the nominees has been outstanding. 

Finally, if a Chief Executive is brilliant at what they do, why would they need a NED? What sort of skillset do they bring to a board that a Chief executive would not have?

It is just wrapped up in that word “Challenge”. I mean: “why?”, “Explain that to me”, “I don’t quite understand that.” “Could you run through what that means?” An inherent curiosity I think is really important – I need to understand this better, my neck is on the block here as well and I have shared accountability with you, so you need to explain this to me. Unfortunately, unchecked executives can actually get consumed with their own self-importance and do things they should not be doing. So Governance, Oversight, Stewardship, Best Practice, understanding your regulatory obligations, living up to your regulatory obligations, having a best in class infrastructure that can support regulatory scrutiny and external scrutiny are really important and very often an exec will get way too focused on the growth of the business and not look at the infrastructure required to support that growth.

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