High Street retailer WH Smith named 38-year-old Argos boss Kate Swann as its new chief executive yesterday and said current chief executive Richard Handover would step up to the role of chairman.
Mr Handover's elevation runs contrary to the Higgs review of non-executive directors which states that chief executives should ideally not become chairmen of their companies, as they would not be sufficiently independent.
However, the Higgs review requires companies to either "comply or explain" and Smith said the changes would provide continuity. Current chairman Martin Taylor is stepping down due to poor health and Smith felt it would be useful for the new chief executive to have the benefit of Mr Handover's experience, which has spanned six years as chief executive and 39 at the company. Mr Handover, who is 57, will retire in January 2005.
Shareholder groups said they would be looking at the changes closely. The Association of British Insurers, said: "It is often the case that shareholders are a little bit wary of a chief executive becoming chairman. But each situation has to be looked at on its own merits and Smith's situation is complex. We will be looking at it very carefully over the coming weeks."
Ms Swann is one of the youngest chief executives of a major company. She will also become one of a small group of female chief executives of major UK listed companies along with Marjorie Scardino of Pearson, Belinda Earl of Debenhams and Rose Marie Bravo of Burberry.
Ms Swann will be paid an annual salary of £475,000 as well as long-term bonus payments which have not been disclosed. She will join the company later this year, after a six-month contract at GUS-owned Argos is complete.
Ms Swann is married with two children. She started her career at Tesco as a marketing executive before spells at Coca Cola and Dixons where she was marketing director at Currys before joining Argos.
The shares closed 4p higher yesterday at 367.