WH Smith names new executive chairman after accounting scandal

WH Smith has named Leo Quinn, formerly the boss of infrastructure giant Balfour Beatty, as its incoming executive chairman.

The appointment, which saw the retailer's shares jump 11 per cent in morning trading on Monday, is intended to help the group "return to stability" following a damaging accounting blunder in its US business.

Mr Quinn is scheduled to begin his new role on 7 April, subject to shareholder approval, where he will replace current non-executive chairwoman Annette Court.

Ms Court is set to depart after the firm’s annual shareholder meeting on 2 February, with senior independent director Simon Emeny acting as interim chairman until Mr Quinn officially starts.

Ms Court commented on the board's decision, stating: "The board strongly believes that Leo’s record of leadership and significant experience of successfully delivering transformation for large international companies make him the right candidate to deliver the group’s return to stability and long-term growth strategy."

Jonathan Eng, fundamental portfolio manager at major WH Smith shareholder Causeway Capital, said: “WH Smith urgently needs a leader who is disciplined on capital spending and focused on rebuilding North American margins.

“As chief executive of Balfour Beatty, Leo Quinn transformed the company from a poorly managed, loss-making UK infrastructure group to one winning contracts, generating cash, and delivering a total shareholder return more than three times that of the FTSE 250 during his tenure.”

open image in gallery

Mr Quinn, who was group chief executive of Balfour Beatty for more than 10 years, will take on the role at WH Smith with a share award worth an initial £12.25 million on top of his £360,000 annual salary, plus pension and benefits.

The award will pay out based on an annual share price performance test measured over five years and could be worth a potential £24.5 million if the firm’s stock doubles in value from its current level.

Mr Quinn will also buy shares worth £2 million with his own funds.

But he will not be entitled to receive an annual bonus or other long-term incentive awards.

Mr Quinn said: “WH Smith is a great business with a remarkable heritage.

“Working with the leadership team and our colleagues worldwide, I intend to ensure the company has the right foundations in place to deliver long‑term value for its investors, business partners and employees.”

Previous WH Smith chief executive Carl Cowling stepped down in November after an investigation into an accounting blunder in its US division and as the retailer warned over profits once again.

Mr Cowling was replaced by Andrew Harrison, chief executive of the group’s UK division, on an interim basis until the appointment of a permanent successor.

open image in gallery

It followed an independent review by Deloitte which found a number of “shortcomings” in which the group overstated profits in the US business by as much as £50 million because of issues with its audit process.

WH Smith said last month it would claw back about £1.5 million in overpaid bonuses from former bosses, including Mr Cowling, just a week after it confirmed it was being investigated by the Financial Conduct Authority over the affair.

The retailer told investors in December that it had kickstarted a remediation plan, to strengthen its governance and controls, ensure processes are aligned across the group, and enact cultural change involving training and monitoring.

WH Smith is now focused solely on its 1,300 shops in global travel locations, including at airports and train stations, after selling its high street chain of about 480 shops to Hobbycraft owner Modella Capital in June.

As part of the deal, the WH Smith name is disappearing from British high streets and being replaced by brand TGJones.

The slimmed-down business reported a pre-tax profit of £108 million for the year to the end of August, excluding what it deems one-off costs.

Mr Harrison is expected to continue as interim chief executive until Mr Quinn takes up the role in April and will then continue to work closely with the executive chairman.

Before Balfour Beatty, Mr Quinn was chief executive for firms including defence technology firm Qinetiq and banknote printer De La Rue.