Stepping out

SIR Nigel Rudd is a man of many parts. He is a takeover raider turned Establishment figure, a scavenger of undervalued companies who became the rebuilder of Britain's glass industry. His latest and possibly toughest job is to chair chemists chain Boots from September.

He will try to speed up the revival of the ailing company, which has been hurt by management upheaval and several failed attempts at branching out from its traditional business, including a foray into New Age therapies.

Not content with that, he has waded into the board pay row, chairing the CBI's review of the thorny issue of 'payment for failure'.

Rudd also chairs glass-maker Pilkington, fire safety group Kidde and motor dealer Pendragon, and sits on the board at Barclays. But his priority is to help new chief executive Richard Baker lick Boots into shape.

He says: 'Boots got a number of things wrong. It tended to pilot new businesses and go for them too quickly without thinking whether they really worked. It was trying to find the Holy Grail of growth outside the core business. But core businesses that start to diversify almost always fail.'

Some see Boots being swallowed by a supermarket giant, but Rudd thinks it can survive. 'It has huge potential. Health and beauty are growth markets. Boots has huge expertise.'

There has been speculation that Boots will sell its over-the-counter medicine business, whose products include Nurofen, Clearasil, Strepsil. Not so, says Rudd. 'It is very profitable and growing. Why would we do anything?' Nor, it seems, is Boots set to bid for Durex and Scholl group SSL, as City rumours suggested earlier this month.

Rudd says Baker will 'choose his own team' when he arrives from Asda, and warns there are 'a lot of costs to take out' as Boots trims prices to match the competition. He claims: 'Visiting Boots will become a more exciting experience.' What, buying headache pills? 'It has to be fun,' he insists.

Rudd, 56, made his name in the 1980s when, with Brian McGowan, another young accountant, he founded conglomerate Williams Holdings. The group, which included household names such as Crown paints and Yale locks, was valued at £3.5bn at its peak.

Born in Derbyshire, where he still lives, he learned about work from his father, a weights and measures inspector. He joined a local accountancy practice, qualifying at the tender age of 20.

His first big job, at housebuilder London & Northern, led him to his first financial killing. He recalls: 'I worked out that, in building, you made the money on inflation in land. I borrowed the money, bought 30 or 40 plots in South Wales, and made an absolute fortune.'

McGowan he bought W Williams, a small Welsh foundry, and he was on his way. Industry was in a slump, but it did not deter the young Rudd. He adds: 'I thought, all fortunes are made in bad times. So I bought engineering businesses.'

Williams fought many bid battles. 'We never really succeeded in an aggressive bid,' says Rudd. 'When you're bidding for a public company, you can't do due diligence. It's like buying a house without a survey - very dangerous.'

Conglomerates fell out of fashion and in the early 1990s, Williams narrowly escaped being bought by US giant Tyco, whose boss Dennis Kozlowski was later charged with fraud. 'The talks ended when I asked them to pay cash,' says Rudd, wryly.

Instead, Williams split itself into Chubb security and firefighter Kidde. Chubb's shares tumbled and it is being taken over. Kidde performed solidly and is valued at £740m. The demerger cost £90m.

Rudd says: 'It was an awful lot of money. Was it the right thing to do? I don't know.' Today, Rudd is proudest of his role at Pilkington. 'When I took over, it was going bust. It had the highest costs in Europe and had gone into contact lenses, where it blew £600m. That was the point at which it was crippled - it still has debts of £800m.

'But it is now the world's most efficient glass producer, the market leader in technology, and has paid dividends all the way through. Dividends are a great way of keeping management's feet to the fire. All this garbage about just having capital growth, I never believed it.'

On his role at Barclays, he says: 'You have to give the best service you can. But nobody is going to like banks. A bank can make huge amounts of money short term by taking extra risk, which will come back and haunt you with bad debts in three years.'

How will banking change? He thinks mergers are unlikely on competition grounds, but adds: 'I think gradually we will see the demise of the mutual.

'I just can't see them competing. The Nationwide is big enough, but the rest - it will take a long time, but they will just die.'

Rudd's multiple board roles have given him firm views on governance. 'The role of chairman is to run the board and make sure its strategy is carried out. It is not to do half the chief executive's job. Many chairmen go wrong by encroaching.'

His CBI committee is grappling with payments for failure. ' Defining failure is difficult. It might be a failure of the whole board if it asks the chief executive to carry out a strategy that fails.

'You might say George Simpson failed at Marconi. I had shares in it, so he failed for me! But if you are honest, the reason it failed is that it bought US businesses for cash that were worthless. And the City was screaming for it to spend that cash and get into the new technologies. The blame should not be entirely at Simpson's door.'

He cites other examples of board abuse. 'Pensions were abused throughout the 80s and 90s. Final salaries were boosted in the last year and the pension was based on that. That's wrong and has been rumbled.

'When somebody leaves, there should be clear guidelines. The Press quite rightly get outraged and ask how come this person was paid so much for failure. Actually, the die was cast five years ago when the contract was signed. The company is most vulnerable then.

'At the point of departure, I'd want the employee to be paid monthly with an obligation to seek further employment, and no extras other than contractual, unless you go to shareholders and ask them for something else.

'I think there is over-regulation now. Board time spent on governance has quadrupled. Legislation will not stop bad judgment. We are spending too much time on things that have nothing to do with the creation of wealth. It's becoming defensive.

'For some companies to succeed, others must fail. I don't want the risk to be taken out of business. Capitalism is about destroying and building.'

Rudd praises banker Derek Higgs, who has been put through the wringer for his board reforms. He says: 'I think he did a good job. He is a big enough man to admit he got some things wrong. The drafting was poor - the chairman not being in charge of the nominations committee, which appoints directors, was odd. The senior independent director was going to get more power than Derek intended.

'The senior independent director has a big role. He's the one to whom executives or investors should go if they are unhappy with the chairman and chief executive.

'But the idea that he should be talking regularly to investors was wrong. You would have three sets of people - very divisive and a recipe for conflict.'

A high earner for two decades - back in 1989 his pay packet topped £500,000 - Rudd could take it easy. He could spend more time shooting - he lost a finger some years ago when a gun went off accidentally. Or he could retreat to his Derbyshire estate or his Portuguese home on the Algarve.

Married for 33 years to wife Lesley, he has three grown children. Tim, 32, has his own import business, The Original Stone Company. Edward, 29, is an accountant and Jennifer, 25, is married to one.

Rudd likes being a grandfather, but shows no signs of slowing down. He says: 'I don't have any planes or yachts. I started work at 16 and this is what I enjoy.'

Interview by Brian O'Connor