Forget the recent reshuffle at Barclays, this is a proper executive-level knifing.
After just 8 months in the job, Ian Smith, chief executive of Reed Elsevier — which publishes the New Scientist and The Lancet — quit on Wednesday morning. He will be replaced by Erik Engstrom, currently the chief of the Elsevier business.
Here’s Reed’s chairman Anthony Habgood explaining the unexpected departure, which of course was by “mutual consent”:
Ian has had the difficult task of leading Reed Elsevier during unprecedentedly turbulent economic times. The Boards and I would like to thank him for his contribution in this respect and wish him well for the future.
Hmm, let’s think about Mr Smith’s contribution since he took the helm of the Anglo Dutch publishing group in March.
Well, two thing stand out: ditching earnings guidance and a deeply unpopular $1.3bn equity fund raising in July that sliced 15% off the company’s share price in one day. His plans to invest “tens of millions” to restore organic revenue growth also did not go down well.
That said, Mr Smith was dealt a bad hand by his predecessor Sir Crispin Davis, who helped rack up $8.4bn of debt through acquisitions such as Choicepoint, a provider of services to the insurance industry.
Indeed, if anyone is to blame for this debacle it is Reed’s former chairman Jan Hommen, who made the decision to hire a CEO with no experience of the media industry. Mr Smith’s previous job, you may recall, was as chief executive of housebuilder Taylor Woodrow, where he presided over the disastrous merger with George Wimpey.
In fact this deal was hatched just six months after Mr Smith was appointed CEO of Taylor Woodrow and, perhaps unsurprisingly, the City wondered whether he might repeat the trick at Reed by pushing for another transformational deal, this time with Wolters Kluwer.
Small wonder then, that Reed’s new chairman, Anthony Habgood, is making a virtue of Mr Engstrom’s strong media background:
“Erik is a proven international executive with over 15 years management experience in the media sector in the US and Europe including five highly successful years developing our worldwide Elsevier business as its CEO. He is now well suited to lead Reed Elsevier, to create value for our shareholders and to deliver growth as economic conditions improve.”
Indeed, today’s knifing will enhance Habgood’s reputation as a hands on, no-nonsense executive. And if there’s one thing Reed did get right in the past year, it was the appointment of this seasoned boardroom operator.
Although it may take the market some time to realise it.
Shares in Reed are currently down 21p at 463.5p, which is slightly surprising.
And for the record here’s how they performance under Mr Smith’s tenure: