High street and travel retailer WH Smith has moved to steady the ship by naming a new executive chairman in the wake of a damaging accounting scandal in its US division. The company has appointed Leo Quinn, the former chief executive of infrastructure giant Balfour Beatty, to the top role.
A Leadership Change to Restore Confidence
The announcement on Monday sent the retailer's shares soaring by 11 per cent in morning trading, signalling investor approval of the move. The board stated the appointment is designed to help the group "return to stability" after an independent review uncovered a major accounting blunder.
Mr Quinn is scheduled to begin his new role on 7 April, pending shareholder approval. He will replace current non-executive chairwoman Annette Court, who will depart after the firm’s annual shareholder meeting on 2 February. Senior independent director Simon Emeny will act as interim chairman in the intervening period.
Annette Court commented on the selection, saying: "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."
The Scandal and Remediation Plan
The leadership change follows the departure of former WH Smith chief executive Carl Cowling in November. Mr Cowling stepped down after an investigation into an accounting error in the US business and as the retailer issued another profit warning.
An independent review by Deloitte found several "shortcomings" that led to the group overstating profits in its US division by as much as £50 million. The issues were linked to faults in the audit process. In response, WH Smith said last month it would claw back approximately £1.5 million in overpaid bonuses from former bosses, including Mr Cowling.
The retailer also confirmed it is being investigated by the Financial Conduct Authority regarding the affair. In December, WH Smith informed investors it had started a remediation plan to strengthen governance and controls, ensure consistent processes across the group, and enact cultural change through training and monitoring.
Quinn's Track Record and Remuneration
Leo Quinn brings a reputation for corporate turnarounds. He was group chief executive of Balfour Beatty for over a decade, where he is credited with transforming the company from a loss-making entity into one that won contracts and generated cash.
Jonathan Eng, a portfolio manager at major WH Smith shareholder Causeway Capital, endorsed the appointment: “WH Smith urgently needs a leader who is disciplined on capital spending and focused on rebuilding North American margins. At Balfour Beatty, Leo Quinn delivered a total shareholder return more than three times that of the FTSE 250 during his tenure.”
Mr Quinn's remuneration package includes an annual salary of £360,000 plus pension and benefits. He will also receive a share award worth an initial £12.25 million, which could potentially double to £24.5 million if the firm’s stock price doubles from its current level over a five-year performance period. Additionally, he will buy shares worth £2 million with his own funds but will not be eligible for annual bonuses or other long-term incentives.
On his new role, 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.”
The retailer, which is now focused solely on its 1,300 shops in global travel locations like airports and train stations, reported a pre-tax profit of £108 million for the year to the end of August, excluding one-off costs. Andrew Harrison, who replaced Carl Cowling as interim chief executive, is expected to continue in that role until Mr Quinn starts in April and will then work closely with the new executive chairman.
