UK Edition
Investor uprising blocks executive appointment at Wolseley
An extraordinary uprising by Wolseley’s shareholders has driven the company to abandon plans to appoint a new financial boss because of their concerns over irregularities at the company he was joining from.
FTSE 100-listed Wolseley said in January that it would take on Simon Nicholls, finance chief at defence and aerospace group Cobham. Announcing the move, Gareth Davis, chairman of Wolseley described Mr Nicolls as a “class act”.
But in an embarrassing reversal, Wolseley on Friday used a short regulatory statement to say Mr Nicholls would not be taking up the post.
The announcement comes just a month after Cobham shocked the markets by posting a 70pc profit slump in the first quarter and said it was launching a £500m rights issue to reduce debt.
It also emerged that Cobham had dismissed two senior directors from its wireless divisions after what the company’s chief executive termed as “mistakes” with revenues from contracts.
Cobham’s shares crashed 30pc as the extent of the problems became clear.
The decision not to take on Mr Nicholls is understood to have come after major investors in Wolseley prepared to approach chairman Mr Davis with the concerns.
One City source said: “A number of larger shareholders were saying they were going to speak to the chairman of Wolseley about the appointment as they didn’t think it was tenable in light of events at Cobham.”
Another broker said events at Cobham were “extraordinary”, adding that what was previously seen as a highly respected business had been “mismanaged badly” over the past nine months.
Mr Nicholls, who has previously held high level roles at Senior and Hanson, was described as highly competent. One analyst described him as a "victim of circumstance" that could "have hardly been foreseen".
Barclays, Wolseley’s house broker, said the decision not to go through with the appointment avoided “reputational risk” and was “the right thing to do given ongoing questions regarding the situation” at Cobham.
It also praised John Martin, the current finance director who is due to succeed Ian Meakins as chief executive in August.
“Having these questions circling at the beginning of a new stage would be an unhelpful distraction,” Barclays said in a note. “It is also a brave, decisive step by John Martin, which is encouraging at the start of his time as CEO”.
Wolseley said that David Keltner, currently chief financial officer of the company’s US subsidiary Ferguson Enterprises, will be appointed as interim finance chief on September 1 instead of Mr Nicholls.
The company said “the selection process to appoint a permanent group CFO will commence immediately”.
Wolseley announced in March that it was closing 15 branches in the UK and cutting “a couple of hundred” jobs because of a decline in repairs work.
That followed the closure of 10 branches and came despite the company revealing in its half-year results that pre-tax profits had tripled to £367m.
At the time, Mr Meakins said the company was “progressively moving into e-commerce”, adding that “uncertainty in the UK market is behind us”.
A spokesman for Cobham said Mr Nicholls remains at the business and is fully focused on successfully completing the rights issue.
A spokesman for Wolseley said: "This is a private matter between the board and Simon and it is not appropriate to discuss further."