Tim Whiston, the chief executive of the beleaguered healthcare software developer iSoft Group, resigned with immediate effect yesterday. He will receive £550,000 in compensation despite presiding over a disastrous six-month period in which the company's shares lost more than 87 per cent in value.
John Weston, the chairman, will take over the running of the company until a replacement is found.
He will steer it through crucial negotiations with banks and the renegotiation of the NHS's IT upgrade. Both sets of talks are critical to iSoft's future and restoring credibility among investors.
Mr Whiston will receive a £550,000 pay-off which represents a year's salary and pension benefits. He said: "I have become increasingly concerned that my continued role with the company may represent a source of negative speculation and comment, being an unhelpful distraction to those within it."
One analyst said: "He got a £500,000 severance package which I'm sure is a lot more than the others losing their jobs as a result of his actions." ISoft is shedding 150 staff as part of a cost-cutting programme.
Mr Whiston joined the company as finance director in 1997 and became chief executive in February 2004, the year iSoft made its mark. It won the lion's share of contracts to supply the multibillion-pound upgrade of the NHS IT systems with software. It appeared to be a candidate to join the FTSE 100 and began looking to other parts of the world for growth.
However, the NHS upgrade has been beset by delays to implementation, overspending and resistance from medical staff. After two profits warnings this year, the decision to abandon iSoft's accounting policy and restate its accounts made Mr Whiston's position untenable. As finance director, he had adopted the aggressive revenue recognition policy that triggered the restatement.
Mr Weston will take charge of a company that has lost nearly 87 per cent of its market value since January. After the decision to restate its accounts, it needs to renegotiate banking covenants. Also looming is the restructuring of the NHS IT upgrade that could open up previously exclusive contracts to competition or see iSoft replaced by other software companies. A report from the National Audit Office this week is likely to heap more pressure on the companies involved.
ISoft shares closed up 3.2 per cent at 57p yesterday.Reuse content