Thomas Cook stunned the City yesterday by announcing the shock departure of its chief executive, Harriet Green, the architect of the travel giant’s recent revival.
Ms Green joined in July 2012 after emailing the chairman, Frank Meysman, saying “I think you need me” – just months after the 173-year old company came close to collapsing under the weight of its debts amid a dramatic downturn in trading in November 2011.
Her drastic surgery saw thousands of jobs axed and stores closed. But she also oversaw a new online strategy and a stellar recovery in both profits and the share price, which stood at just 14p when she joined.
The shares slumped 24.1p or 18 per cent to 113.5p yesterday as she handed over the reins to chief operating officer Peter Fankhauser with immediate effect, saying her work “was complete”.
But there was immediate doubt in the City over the timing of her departure. Only a week ago she told a Management Today conference: “You can’t do a transformation on this sort of scale in a year or two years. I usually say it’s about six years. We go to the City next week with our second year of results and to show if and how the company has become fitter and better, and we’re absolutely not done.”
Mr Meysman said the decision was “unanimous” but Ms Green has no other job to go to. It is understood the decision was ratified only yesterday. As recently as Monday Ms Green was being offered up to journalists for interview in January.
Numis analyst Wyn Ellis said the market was reacting with justifiable scepticism to the timing of her departure. “After all the hype, the transformation of Thomas Cook is far from complete. The timing is unfortunate, especially as the trading environment appears to be deteriorating,” he said.
Mr Meysman painted the departure as the hand-over from a turnaround specialist to a travel expert in Mr Fankhauser, a travel industry veteran of more than 20 years’ experience. “We have a different balance of requirements going forward,” he said. “We now move to a new phase where the implementation of that strategy is becoming the more important part, and therefore we feel it is time to move to somebody who has been groomed as a CEO who comes from the industry.”
Ms Green – who earned £2.86m last year – is still negotiating a pay-off and has a six-month notice period. But the real payday will come from her share options, as the stock has risen almost tenfold in the past two and a half years despite yesterday’s slump. “She will earn a substantial amount of money,” Mr Meysman said. Sources suggested that with six months’ salary and her share options Ms Green could walk away with close to £8m.
Underlying profit before interest and tax – stripping out the impact of a stronger pound and disposals – rose 44 per cent to £323m in the year to 30 September, but will grow at a “more moderate” pace in the years ahead. For next summer UK bookings are up 8 per cent and prices are about 1 per cent higher.
Long hours, bold moves and big panda hugs
Harriet Green works to a punishing schedule, managing to run a business on four hours sleep a night and putting herself through a daily yoga workout hours before most workers’ alarms have gone off.
Married with step-children, she splits her time between the five-star luxury of the West End hotel Brown’s during the week and a home in Oxford at the weekend.
Having cold-called her way into the job as an outsider to the industry, she immediately got to grips with the business, hiving off staff and stores while masterminding a £1.6bn refinancing to shore up the balance sheet.
She was a rare female role model at the top of a high-profile business, but she could be abrasive with the press – particularly regarding the human cost of rebuilding the company – and occasionally her musings took her into Private Eye Pseuds Corner territory. Earlier this year she described herself as a “landa”, a cross between a lion and a panda. “Sometimes I am a real lion. I can roar, make things happen, I can change the course through will, energy and just being incredibly aggressive and assertive. But I can also be a big panda. If a company is sick, you have to be gentler – big eyes, big hugs.”Reuse content