In a move aimed at restoring stability and confidence, WH Smith has appointed Leo Quinn, the former CEO of infrastructure giant Balfour Beatty, as its new executive chairman. The announcement, which saw the retailer’s shares jump 11% in early trading on Monday, comes in the wake of a damaging accounting scandal in the company’s US division.
Quinn, who transformed Balfour Beatty from a poorly managed, loss-making UK infrastructure group into a cash-generating, contract-winning success story, is tasked with leading WH Smith’s “return to stability” and implementing a long-term growth strategy. The appointment is subject to shareholder approval and will see him replace current non-executive chairwoman Annette Court, who is set to depart after the firm’s annual meeting on 2 February.
Jonathan Eng, a fundamental portfolio manager at major WH Smith shareholder Causceway Capital, welcomed the move, stating that the company “urgently needs a leader who is disciplined on capital spending and focused on rebuilding North American margins.”
Under the terms of the appointment, Quinn will receive an initial £12.25 million share award, in addition to his £360,000 annual salary, pension and benefits. The award will be based on a five-year share price performance test and could be worth up to £24.5 million if the firm’s stock doubles in value from its current level. Quinn will also invest £2 million of his own funds in the company.
The new executive chairman said he intends to “ensure the company has the right foundations in place to deliver long-term value for its investors, business partners and employees.” His appointment comes after former WH Smith CEO Carl Cowling stepped down in November following an investigation into the accounting issues in the US division, which led to a profit warning.
An independent review by Deloitte found “shortcomings” in the group’s audit processes, resulting in profits being overstated by as much as £50 million. WH Smith has since clawed back £1.5 million in overpaid bonuses from former executives, including Cowling, and is being investigated by the Financial Conduct Authority over the affair.
With the retailer now focused solely on its 1,300 travel locations, including airports and train stations, after selling its high street chain, Quinn will work closely with interim CEO Andrew Harrison to steer the company back to stability and growth.
