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Reed Elsevier chief quits after just eight months

Shares in publisher Reed Elsevier tumbled yesterday after the shock announcement that chief executive Ian Smith would step down after only eight months in the job.<br /><br />Sources close to the situation said Smith and the New Scientist publisher&rsquo;s board had mutually agreed that he &ldquo;wasn&rsquo;t the right fit&rdquo; for the role in tough economic times, having had no previous experience leading a media company.<br /><br />Reed chairman Anthony Habgood &ndash; also appointed this year &ndash; denied that there had been a disagreement over strategy.<br /><br />Smith had made a strong case for accelerating investment, in contrast to his predecessor, Sir Crispin Davis, who had focused on cutting costs to offset declining ad revenue. <br /><br />The firm raised over &pound;800m from investors in July to pay down debt.<br /><br />Former Taylor Wimpey chief executive Smith will walk away with a package worth &pound;1.1m, including seven months pay, cash in lieu of pension and a 35 per cent cash bonus. <br /><br />Erik Engstrom, chief executive of Elsevier &ndash; the group&rsquo;s most profitable unit &ndash; has replaced Smith with immediate effect. The stock closed down four per cent at 465p.<br /><br />WHAT IMPACT WILL SMITH&rsquo;S RESIGNATION HAVE?<br /><br /><strong>SAM HART </strong> CHARLES STANLEY<br />It raises questions over the group&rsquo;s strategy at a time when people thought it was getting back on its feet, having completed the rights issue earlier this year. It is mysterious to say the least, and not good for shareholders in the near to medium-term.<br /><strong><br />GIASONE SALATI </strong>EXECUTION LTD<br />Smith&rsquo;s strategy of investing was a radical change from the previous policy of margin expansion. But he is known for radical solutions, and the appointment of an internal successor might suggest the board would not support a transformational deal. <br /><strong><br />ALEX DEGROOTE </strong> PANMURE GORDON<br />The news is a surprise, though he has not made much of a positive impact on investors since he assumed the role earlier this year. Whereas Engstrom is well-known to investors, and Elsevier appears the least troubled of the four main Reed divisions.