Quin becomes acting Telecom CEO, interim Gen-i boss named
UPDATE May 31: Chris Quin may have missed out on the big chair, but the Gen-i boss will get to be acting Telecom CEO, starting tomorrow.
Mr Quin will fill the chief executive role from June 1 until new CEO Simon Moutter's arrival on September 1.
Paul Reynolds will depart on June 30, as scheduled, following a cross-over month with Mr Quin.
In turn, Greg Mikkelsen has been named acting CEO of the Geni-i.
Mr Mikkelsen is general manager for enterprise clients at the Telecom IT and services division. Previous roles have included head of enterprise trans-Tasman sales for Gen-i, and head of business for Telecom.
Earlier, Mr Quin told NBR ONLINE that Telecom would "not be standing still" until September 1.
He would be talking frequently with Mr Moutter. Projects include completing Telecom’s business planning for its next financial year.
On April 24, Mr Quin said he was disappointed to have missed out on the top job, but strongly endorsed Mr Moutter.
A third declared candidate, Telecom Retail head Alan Gourdie, could not be reached for comment.
With his solid finanancial record growing Gen-i, and his personal role fronting to media and customers during during the XT crisis, many saw Mr Quin as a serious contender.
There has been inevitable speculation that passed-over candidates could leave Telecom.
On this point Mr Quin told NBR he had let staff know, "I’m totally focused on Gen-i.”
The division would play a key role in Telecom’s growth, he told staff.
In the past, some passed over for the top job have walked - notably Marko Bogoievski (now head of Infratil) and Mr Moutter. Both lost out to BT's Paul Reynolds in 2008 (Mr Moutter after a three-month stint as acting CEO).
Forsyth Barr research director Guy Hallwright said Telecom needed group leaders who could drive customer relationships. Mr Quin was strong in this area.
'Theresa Gattung's right-hand man' to lead Telecom
UPDATE APRIL 23: Forsyth Barr research director Guy Hallwright has given new Telecom CEO Simon Moutter a cautious thumbs up.
"He was a pretty solid executive in the days when he was at Telecom - mainly on the network, operational side - and he appears to have done a good job at AIA [Auckland International Airport]. I hear only good things about him at AIA."
Deutsche Bank research analyst Geoff Zame said Mr Moutter's familiarity with the company, including many staff still around from the Theresa Gattung era, meant he could "hit the ground running, providing comfort to shareholders that progress in key area's can be maintained and accelerated."
Mr Zame said Mr Moutter's reign as Telecom chief operating officer (2006 - 2008) "was a period characterised by cost and capital discipline that was rewarding for shareholders and which we believe is likely to be similar to 2012-2014 due to a cyclical decline in capex and renewed focus on cost reduction."
Deutsche Bank is not expecting any surprises from the new Telecom boss.
"We expect the central planks of any new strategy to incorporate mobile and UFB - which arguably provides Telecom with the opportunity to untangle itself from its legacy PSTN [traditional voice line] products."
Forsyth Barr maintains its hold rating on Telecom, primarily because of the recent run up in its shares, Mr Hallwright said this afternoon.
Deutsche Bank also retained its hold ranting.
Telecom's board has passed over at least one internal candidate to appoint Simon Moutter as chief executive and managing director of Telecom, effective from September 1.
Mr Moutter was talked up by a Telecom insider in an NBR list of contenders published December 15 last year, but was not widely tipped for the role.
He has previously held senior positions at the company, including chief operating officer under former CEO Theresa Gattung.
Although the dot.com bust and regulatory changes contributed to the multi-billion dollar market cap meltdown under the Gattung regime, the CEO and her leadership team were also criticised by some commentators for failing to anticipate the government's resolve to push through regulatory changes, mis-steps in the mobile market, an aimless alliance with Microsoft's MSN, and over-paying for assets across the Tasman.
Mr Moutter left to become CEO of Auckland International Airport (AIA) in 2008 after being passed over for Telecom's top job in favour of external candidate Paul Reynolds.
Mr Moutter did serve as acting Telecom CEO in the three months between Ms Gattung's departure and Mr Reynolds' arrival.
Auckland Airport has delivered solid financial performance under the ex-Telecom man (see below, and charts above), bouncing back after a bid by the Canadian Pension Plan to take a 40% stake in the airport - initially supported by the airport's board - collapsed in the face of a hostile political reaction that saw the deal blocked by the then Labour government.
The missed outs and the maybes
Mr Moutter beat at least one inhouse candidate - head of retail, Alan Gourdie - the only contender to confirm, via NBR, that he was making a run at the top job.
NBR understands Gen-i services division boss Chris Quin was a second inhouse contender. He would not comment.
Mr Quin was seen as making his bones during the XT crisis as he repeatedly fronted to media and customers.
Telecom's extended "global" CEO search began last year, and appears to have seen the company canvasing a variety of potential candidates.
A trusted source inside the company told NBR ONLINE that departing Air New Zealand CEO Rob Fyfe visited Telecom twice for meetings, and on a third occassion met senior Telecom figures at a cafe.
Shortly after, on February 24, Mr Fyfe told media he had no interest in the position.
And a person close to departing NZX CEO Mark Weldon told NBR ONLINE that Mr Weldon had been approached about a senior role at Telecom.
Mr Weldon said he was still assessing what direction he wanted to take after leaving the local stock exchange.
'Theresa Gattuing's right-hand man'
"Simon's got a huge job ahead of him in terms of positioning Telecom in the new market," Telecommunications Users Association chief executive Paul Brislen told NBR ONLINE.
"He's got to sort out staffing levels, which are far higher than comparable businesses; he's got the UFB migration to consider; and he's got to shake off the image of being Theresa Gattung's right hand man for all those years," he said.
"But Simon proved he can handle himself at Auckland Airport and has done a tremendous job there. We look forward to working with him."
Mr Moutter's remuneration will be below that of his predecessor, Paul Reynolds, whose compensation famously topped $5 million - but adjust for the Chorus demerger, which saw roughly half the company spun-off, it is in the same ballpark.
The new CEO will receive:
- A base salary of $1.35 million.
- An annual short term performance incentive of $750,000 in cash if he meets the targets set by the board.
- and shares to the value of $600,000 for achievement of those targets, with the shares received as part of this performance incentive restricted from sale for two years.
- Mr Moutter will also be eligible for $1m in share rights annually, as his long-term incentive.
- The new CEO will also receive a one-off grant of share rights on commencement with a value of $750,000.
"The vesting of these share rights will typically not occur until three years after they have been granted, and vesting is subject to meeting financial and shareholder return performance hurdles to be determined by the board," chairman Mark Verbiest said.
In all cases, the performance targets will be closely aligned to the delivery of shareholder value.
“This package represents the market rate for a CEO position of this magnitude,” Mr Verbiest said.
“While Telecom is a smaller company than it was following the Chorus demerger, it retains a significant level of scale, challenge and complexity and the package reflects that.
"Telecom is the largest listed company by market capitalisation on the NZX.
“If challenging performance targets are met then Simon will be rewarded appropriately, in a manner that is closely aligned with shareholder value.
"As such, the majority of Simon’s remuneration package is at risk, with a high proportion of incentives paid in shares.”
This grant vests in two tranches - the first half after 12 months and the second half after 24 months.
Board: proven his worth at airport
“Simon’s knowledge of the telecommunications industry in New Zealand is strong and deep, and he is a proven CEO of a significant listed organisation,” Mr Verbiest said.
“He has also demonstrated that he can deliver growth in a challenging environment by transforming the customer experience at Auckland International Airport.
“It is also pleasing that the best candidate for the job has been shown to be a New Zealander," he said.
“He was instrumental in the transformation of Telecom in the early 2000s, where the company pushed strongly into the IT services sector with the acquisition and expansion of Gen-i, the turnaround of Telecom mobile, and the roll-out of nation-wide broadband services.”
“He has also led the transformation of Auckland International Airport, which has significantly improved the international traveller experience as well as growing customer numbers [and] significantly growing revenues from non-airport business."
Auckland Airport performance
On February 29, Auckland Airport has announced a profit after tax of $69.1 million for the six month period ended December 31, 2011, up 5.5% during the same period in the previous year, with underlying profit after tax up 15% to $70.8 million.
Total revenue of $215.9 million was up 8.9% on the previous corresponding period, while expenses rose by 15.3% to $54.5 million.
A 2010 expansion drive saw Auckland Airport bjy a 25% stake in Queenstown Airport for $28 million, and a 24.5% stake in North Queensland Aiport (operator of the Cairns and Mackay airports for $A132 million).
Simon Moutter CV
2008-present: Chief executive officer, Auckland Airport
2006-08: Chief operating officer (business) – Telecom; including three-month stint as acting CEO between Theresa Gattung's departure and Paul Reynolds' arrival
2002-06: Chief Operating Officer – Telecom NZ
2000-02: Group general manager network & amp; International – Telecom NZ
1999-2000: General manager network delivery – Telecom NZ
1992-99: Chief executive – Powerco
1991-92: Station manager – New Plymouth Power Station
1987-90: Managing director/owner – Electrotech Consultants
1983-87: Electrical engineer, Electricity Division – NZ Ministry of Energy