Changing the Guard at U.K. Plc After a Wave of CEO Departures

(Bloomberg) -- Five leaders of top British companies announced in as many days that they’re stepping down, opening the way for a new generation of executives.

Some, like BP Plc CEO Bob Dudley and Tesco Plc CEO Dave Lewis, are handing over after years spent transforming their energy and retail empires to cope with the tectonic forces of environmental issues and online shopping. Others, like Alison Cooper at Imperial Brands, a tobacco company, are stepping down because they didn’t adapt to changing markets.

The players in a week of big changes:

Bob Dudley, BP

The Record: Dudley will retire as CEO of BP early next year, a long-anticipated step after more than nine years running the energy giant. He took the helm during BP’s darkest period, the Deepwater Horizon oil spill, and is widely credited with rescuing the company from that disaster.

Investor View: BP shares have risen about 11% during his tenure, compared with a 27% return for the FTSE 100, and production is growing again.

Succession and Outlook: Dudley is succeeded by Bernard Looney, BP’s upstream chief, who faces an immediate challenge – whether to pivot the company toward cleaner, but typically less profitable forms of energy, or focus on fossil fuels even as demand growth slows.

Dave Lewis, Tesco

The Record: Lewis was hailed as the man who fixed Tesco. He guided the U.K.’s largest supermarket chain back to health from a massive accounting scandal that came to light weeks after he took over in 2014. Lewis  streamlined Tesco, closing U.K. fresh-food counters and pulling back from international markets like South Korea and Turkey. His acquisition of wholesaler Booker has reduced the company’s exposure to the troubled British retail market as consumers shift spending online.

Investor View: Tesco shares have returned about 1.4% a year under Lewis, according to data compiled by Bloomberg. That compares with a 5% average annual gain for the FTSE 100.

Succession and Outlook: Lewis is handing over to Ken Murphy of Walgreens Boots Alliance Inc., a surprise choice. When he takes over next year, Murphy will need to keep frisky discounters Aldi and Lidl at bay. Beyond that, he’ll need a strategy for the technological revolution that’s upending retail, including mining a trove of customer data to boost Tesco’s online business.

Alison Cooper, Imperial Brands

The Record: Cooper’s nine-year stint in charge of Imperial Brands Plc got off to a strong start but fizzled as the owner of Gauloise cigarettes and Blu vaping devices failed to keep up with bigger rivals and nimbler developers of smoking alternatives like Juul Labs Inc. Under Cooper, Imperial expanded its presence in the U.S. by acquiring the Winston and Kool brands. But the backlash against vaping prompted a profit warning, fueling investor unrest and hastening her departure.

Investor View: Imperial Brands shares have returned 4.9% a year under Cooper, according to data compiled by Bloomberg. That compares with a 7.1% average annual gain for the FTSE 100.

Succession and Outlook: An incoming CEO, yet to named, will have to navigate the storm over vaping while accelerating the company’s overhaul. Imperial Brands has been trying without success to sell its premium cigar business, and investors are calling for greater transparency over its finances.

Martin Gilbert, Standard Life Aberdeen

The Record: Martin Gilbert is leaving as vice chairman of Standard Life Aberdeen Plc, the asset manager he helped found more than three decades ago. Gilbert lost his grip on power earlier this year when a dual CEO structure, in place since the company was created by a 2017 merger, was scrapped; Keith Skeoch became the sole chief executive.

Investor View: Standard Life Aberdeen  has plunged 29% since Aug. 8, 2017, the day the merged company’s shares began trading. This compares with a 3.1% gain in the FTSE 100 since that date. 

Succession and Outlook: Skeoch has a tough task. Big name active money managers are charging too much for mediocre returns, and many investors have shifted to passive funds that track benchmark stock and bond indexes and offer much lower fees. What started as a trickle has turned into a flood, forcing fees lower and triggering consolidation and job losses.

Vernon Hill, Metro Bank

The Record: Hill’s role as chairman of Metro Bank Plc was under scrutiny since the start of the year, when the lender said it had incorrectly classified hundreds of millions of pounds of mortgages, failing to set aside enough capital to cover risks. That surprise led to questions about the 10-year-old bank’s viability, then to calls for Hill – Metro’s co-founder – to go.

Investor View:  Metro Bank was a star performer, touching a high of a little over 40 pounds ($49.39) last year, easily outperforming the U.K.’s blue chip stock index. By the beginning of 2019 they had halved, and since the loan misclassification announcement the stock has lost about 90% of its value.

Succession and Outlook: The bank is looking for a sucessor to Hill. Metro’s attraction was its growth strategy, and getting this back on track will be his or her priority. Speculation has mounted in recent weeks that the bank may not be able to outrun its problems and might be sold. Metro has said so far that it’s considering asset sales to repair its finances.

--With assistance from Eric Pfanner, Suzy Waite, James Herron and Harry Wilson.

To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net, Sree Vidya Bhaktavatsalam

©2019 Bloomberg L.P.

With assistance from Bloomberg