Spirit of true Brit lacking within UK's top boardrooms

NORMAN Murray and Lord Smith of Kelvin have always shared a lot in common. The two Scots business veterans together founded Morgan Grenfell Private Equity in 1989 and even shared a flat early in their careers.

When Murray takes up the chairman's seat at oil services group Petrofac table in May, the two friends will find another common tie as they will both lay claim to the chairmanship of two FTSE 100 companies.

Murray has chaired Edinburgh-headquartered Cairn Energy since 2002 while Lord Smith oversees Scottish & Southern Energy and Weir Group.

Both men are in a minority, however. The number of British bosses presiding over the UK's biggest companies is fast diminishing - with another one last week biting the dust when German-born Gerard Kleisterlee was named as Sir John Bond's successor as the chair of Vodafone.

Only nine of the UK's 20 most valuable firms are now chaired by a Brit, and questions are being asked about whether more jobs should be handed to home-grown talent.

The issue spreads beyond the FTSE 100. Many firms north of the Border have handed over the reins to chief executives and chairmen who live outside Scotland's borders.

As one Scots business leader reminisced: "Thirty years ago you'd go up to events like the SCDI annual forum and you'd meet the titans of industry - now it's a lot of regional managers. You're not getting the real decision-makers there all of the time."

When Stephen Hester was appointed to the top job at Royal Bank of Scotland his main residences were a 350-acre pile in Oxfordshire and another home in London's affluent Holland Park.

Home for Rupert Soames, chief executive of Glasgow-based temporary power supplier Aggreko, another FTSE-100 firm, is Buckinghamshire.

According to the unions, UK corporates should take note before all senior positions are dominated by foreign candidates. Stephen Boyd, assistant secretary of the STUC, warns that companies can become detached from their workforces and the communities they serve if shareholders and executive teams are sitting in offices abroad.

"It's not just chairmen, we start with the problem of foreign ownership," Boyd says. "The UK as a whole has been very relaxed about letting ownership drift abroad. The benefits of indigenous ownership are well recognised."Some analysts say British chairmen who have cut their teeth in the City and other financial centres such as Glasgow and Edinburgh are advantageous as they already know all of the analysts and investors with whom they will deal on a daily basis.

But others point to the increasingly global nature of many UK firms to explain why foreign chairmen are increasingly popular.

"It's much more important that British and Scottish companies are chaired by the best people to challenge or support the board, and to accurately represent the shareholders who are increasingly multinational," says Rosalie Chadwick, a corporate partner at law firm McGrigors. "These businesses now have multinational customers, shareholders and employees."

While UK-based chairmen may have impeccable contacts on home soil, foreign candidates are likely to have knowledge of key overseas markets such as Asia, the Middle East and America, where British companies are increasingly seeking to expand, she says.

Chadwick suggests that rather than adopting a protectionist attitude, Britain should be "flattered" that the crme de la crme from across the world is willing to expand and grow UK plcs. "It's quite a compliment," she says.