Capita has become the third British outsourcing company in five months to lose its chief executive – but this time to retirement rather than a deluge of profit warnings and scandal.
Paul Pindar has spent 26 years at Capita, including 22 as managing director and chief executive, building the company into a £3.5bn giant with public and private sector clients ranging from the Cabinet Office to Carphone Warehouse and the O2 Arena. Mr Pindar, 54, is stepping down at the end of February next year, returning to his private equity roots to work with small and medium-sized firms.
But he will still face an uncomfortable session tomorrow before MPs on the Public Accounts Committee, along with executives from the oursourcers Serco and G4S, which are in much worse shape. Both are going through a painful process of “corporate renewal” after allegations in the summer that they billed the Ministry of Justice for monitoring 3,000 non-existent offenders on lucrative electronic tagging contracts.
Serco’s chief executive Christopher Hyman stood down with immediate effect a month ago, after the allegations that prompted a criminal investigation by the Serious Fraud Office. Last week the company warned on profits for this year and next. At G4S, chief executive Nick Buckles succumbed to investor pressure and resigned in May after a succession of mis-steps including a botched £5.2bn takeover of a Danish company and the fiasco of not being able to supply enough security guards for London’s Olympics.
Capita has been a beneficiary of the woes besetting its rivals.Among £2.9bn of new contract awards so far this year is a £400m prisoner tagging deal which both G4S and Serco pulled out of the running for. Capita’s current bid pipeline stands at £4.2bn and it remains on track to meet its 8 per cent organic growth target this year. Capita is the biggest player in the UK market, with £3.2bn in revenues compared with £2.7bn for Serco and £1.9bn for G4S.
But Mr Pindar admits his rivals’ difficulties have hurt the sector’s reputation. He says Capita has “kept [itself] completely separate” from its rivals’ issues but stressed the role that outsourcing firms still had to play in tackling the deficit. He added: “It doesn’t help the wider sector. Hopefully the situation will be short-lived, there will be rehabilitation in short order and we will begin to move on.”
The Capita chief executive, who earned £1.94m in total last year, will receive no payout when he leaves and will retain only parts of the share incentive plan applicable to his time at the company. “I don’t want to walk out of here with a truck of money that doesn’t belong to me,” he said.
Andy Parker, the deputy chief executive and joint chief operating officer, will succeed Mr Pindar on 1 March. Dawn Marriott-Sims, the head of Capita’s workplace services arm, joins the board in January, succeeding Mr Parker as joint chief operating officer.
Mr Pindar is highly regarded in the City and news of his departure sent the shares down slightly, by 6p to 977p. Liberum Capital’s David Brockton said: “Paul is leaving of his own volition and leaving on a high. He’s been instrumental to the development of the business over two decades.” Mr Brockton, however, rates the shares a sell due to structural issues within the outsourcing sector.