Review
By Nigel Cassidy BBC business reporter

Last year was one of the most difficult years for business in decades. William Sargent, joint chief executive of computer animation company Framestore-CFC, PY Gerbeau, former Millennium Dome boss and now head of Xscape, and Patience Wheatcroft, business editor of The Times, talk to the BBC about the low points. "It's been a dreadful year for directors," says Patience Wheatcroft. "As a breed, they have nothing to be proud of."

"It's true now that boards are a little wiser - they do know they must pay more attention.

If you've got a good product and strong corporate governance, there should be hope around the corner PY Gerbeau

"However, they're not yet in a position that they can trust the accounts that they see."

And she has news for anyone hoping for seismic changes when the long awaited Higgs review into the future role of non-executive directors is published early in 2003.

In short, there are no easy answers: "Poor Derek Higgs is struggling to find anything to put in his report.

"He doesn't believe we should legislate for change in the boardroom - and I'm inclined to agree with him.

Keeping a cool head

Ms Wheatcroft, William Sargent and PY Gerbeau all agree that the key to improving board performance in 2003 lies ultimately not with the auditors but in shareholders becoming more aggressive.

Directors who fail to deliver should be voted off without payoffs. There should be no place on boards for those with multiple directorships and insufficient time or skills to earn their keep on behalf of investors.

Sometimes to save the jobs of a hundred, you have to let ten people go William Sargent

So is it a difficult time to be in charge of a UK company?

Mr Gerbeau reckons it is all about keeping a cool head: "I don't think it's scary.

"As someone who came from the world of corporate rescue, the fundamentals haven't changed.

"You just have to concentrate on the balance sheet, the cash flow and the human capital.

"If you've got a good product and strong corporate governance, there should be hope around the corner."

Biggest corporate foul-up

According to Mr Sargent, business often now involves making painful decisions about the future of people you've worked with.

"Sometimes to save the jobs of a hundred, you have to let ten people go," he says.

Every year the BBC wants more dinosaurs for less money. It's not a bad discipline William Sargent

"So much depends on your relationship with the bank and, of course, what your orders are like.

It's been particularly tricky for those businesses that only depend on the local market.

"If you've customers in Europe, America and Japan, then you've got more of a chance."

In a year when one financial disaster has followed another, the three gave their vote for the biggest corporate foul-up to Cable and Wireless, not least because the shareholders appeared to stand by as the board signally failed to get a grip on the company's ever-worsening balance sheet.

Encouraging signs

For Patience Wheatcroft, the defining moment of 2002 was when Chancellor Gordon Brown admitted that he, or rather the UK economy, was not in fact going to grow in line with the Treasury's forecast for 2003.

People work for people, it's not all about pay PY Gerbeau

Even so, both Mr Sargent and Mr Gerbeau express some cautious optimism for UK companies, if not the stock market.

Mr Sargent, whose computer animation company made the TV programme Walking With Dinosaurs, says he is encouraged by recent signs of life in the world of advertising.

He also feels that enterprises which have managed to cope during the downturn will prosper when things got better.

"Every year the BBC wants more dinosaurs for less money. It's not a bad discipline."

Stagnant markets

One of Mr Gerbeau's biggest concerns is that industrial strife is returning to the UK: "It's one reason why I left France."

His solution is better leadership: "People work for people, it's not all about pay."

Patience Wheatcroft warns that the business economy shows every prospect of deteriorating further in the first three-quarters of 2003.

She says it is so hard for companies to make money in this climate that she sees no reason why the FTSE 100 can do anything but remain at around the 4,000 mark for at least the next nine months.

For Mr Gerbeau such predictions only confirm the wisdom of his company Xscape deciding to abandon its plans to float on the stock market.

"We've got a brilliant chairman, with the vision to plot our expansion without the stock market.

"So far, we're doing very well indeed."