Split over WH Smith top job

Two of retailer's big institutional shareholders object to leading candidate for post of chief executive

The race to fill the chief executive's chair at WH Smith has taken a new turn with two institutions objecting to the candidacy of Keith Hammill, the present finance director, and one institution coming out in favour.

The two main shareholders, who between them account for 7 per cent of WH Smith's equity, are said to prefer a candidate with more of a retailing background than Mr Hammill's.

They are also thought to be upset by reports that Mr Hammill is touting a break-up of the group, and that the succession issue has been allowed to fester over the summer without a clear announcement from the board.

"Keith is an excellent finance director, but you do need a retailer running this company at the moment," said a source at one of the two opposing shareholders.

"In any case, if the board are so clearly set on Keith, why has it taken so long for them to come to a decision, and why hasn't an announcement been made?"

The shareholder claimed to have had "no formal meetings" with Mr Hammill on the subject of a demerger. At least one board member is believed to support the two institutions' view, and to be concerned at the way the succession issue has been handled; the board member is pressing for a retailer - perhaps from outside the group - to be appointed instead of Mr Hammill.

There are still three outside candidates with retail experience in the running for the job. Two have not been identified, but one is known to be Stuart Rose, currently a senior executive at the Burton Group.

The internal candidates include Alan Giles, managing director of Waterstones, Richard Handover, currently running the newspaper distribution arm, and John Hancock, managing director of the US retailing operations. All have retailing backgrounds.

A third institution, Franklin Resources, the California-based fund manager which is part of Templeton Worldwide and holds 11 per cent of the equity, is believed to be supporting a break-up bid, following the argument that it is the only way to realise shareholder value. This would involve reopening discussions with Virgin over the sale of Smith's 75 per cent stake in Virgin/Our Price, for which Virgin reportedly offered pounds 135m in May - an offer that was immediately rebuffed by Bill Cockburn, then chief executive of WH Smith.

Analysts were surprised at the size of the offer, which was some 30 per cent above their valuations for the stake.

Under the break-up plan, the company would also explore a possible demerger or trade sale of Waterstones, which could fetch pounds 250m. "The best way to realise shareholder value is to break the group up and retain just the core retail business," said Matthew McEachran, retail analyst at Henderson Crosthwaite. "Then the management can focus on getting the merchandise right and expanding the hotel and airport concessions."

Mr McEachran estimates that a break-up would be worth pounds 1.25bn, or 441p a share. On Friday, the company's shares closed at 378p.

WH Smith sources said this weekend that no strategic decisions would be made until a new chief executive was appointed, and that this decision would not be made until the first week of September at the earliest.

"The biggest priority facing this group is to appoint a new chief executive. Until then, it is fair to say that no strategic decision will be made," said a spokesman.

The company is understood to have earmarked the US music retailing business, which is only just breaking even in dire trading conditions, as a candidate for disposal.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

The ZX Spectrum is back

The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

Even the screenwriter pours scorn on Grace of Monaco biopic

The critics had a field day after last year's premiere, but the savaging goes on
Menstrual Hygiene Day: The strange ideas people used to believe about periods

Menstrual Hygiene Day: The strange ideas people once had about periods

If one was missed, vomiting blood was seen as a viable alternative
The best work perks: From free travel cards to making dreams come true (really)

The quirks of work perks

From free travel cards to making dreams come true (really)
Is bridge the latest twee pastime to get hip?

Is bridge becoming hip?

The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
Long author-lists on research papers are threatening the academic work system

The rise of 'hyperauthorship'

Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

The rise of Lego Clubs

How toys are helping children struggling with social interaction to build better relationships
5 best running glasses

On your marks: 5 best running glasses

Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

'Ben Stokes gives everything – he’s rubbing off on us all'

Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada