Chip’s off the menu

There are many scapegoats for our sins, but the most popular is providence

Well it was only a matter of time really. A CEO under whose tenure the share price lost 80% of its value was never going to really be around to see this thing through.

Chip Hornsby, CEO of Wolseley left the company yesterday by mutual consent.

He’d been in the construction materials distribution industry for 31 years and joined Wolseley in 1983 when they acquired Ferguson.

He was the CEO overseeing the £1.35 bn acquisition of Nordic competitor DT Group, which looked like a good idea at the time, only for it to saddle the group with huge levels of debt just a year before the balloon went up in global credit terms.

Under his leadership the group has last 20,000 jobs, including more than 3,000 in the UK and been through a £1bn rights issue and disposed of its loss-making US business Stock Building Supply to a joint venture. And then there’s a share price. Trading at around £47 when he took over, the shares rose some 5% to around £11 on the news of his departure.

The rights issue and the sale of Stock will go a long way towards helping the group’s debt levels which is what they were supposed to do. But they’ve come to late to save poor old Chip, who is probably paying the price for messing around with the rights issue. It was rumoured for a long time before it actually happened and many analysts believe it was badly timed.

He leaves with a payout of £750,000, the minimum his contract has set. And while it seems like a lot of money (heck, it is a lot of money) to us lesser mortals, it’s not that great in big business terms. I wouldn’t say that Hornsby made a mess of things in the way that, oh say, Sir Fred Goodwin did and look what he got away with.

What I think is interesting though, is that Hornsby’s successor, Ian Meakins, used to be CEO at Alliance UniChem, following in the footsteps of a certain Geoff Cooper.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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