Dutch CFO Exits On Governance

Smits-Nusteling, finance chief at telecom KPN, cites company's new executive structure.

Royal KPN NV, the largest Dutch phone company, said Chief Financial Officer Carla Smits-Nusteling has stepped down because of disagreements about governance, the second departure of a board member in two months.

Eric Hageman, KPN’s head for Belgium, and Steven van Schilfgaarde, chief of the Dutch corporate business, will become interim CFOs with immediate effect, the Hague-based operator said in a statement today, adding that it’s looking for a permanent replacement as soon as possible. Smits-Nusteling, 45, will leave April 1. In November, KPN said that another board member, Baptiest Coopmans, will also leave on April 1.

Under the new executive structure announced in May, management board members meet directly with unit chiefs on matters that concern their respective business in an executive committee, said Stefan Simons, a KPN spokesman. The changes, which took effect this year, allow for more direct control and decision-making than the previous procedure, where various unit boards reported to the management board, he said.

“A further change in senior management at KPN will be greeted with some nervousness,” Stuart Gordon, an analyst at Berenberg Bank, wrote in a note to clients. “We expect that there will be speculation that the CFO is leaving either because there could be another profit warning in the pipeline or that there was discord on the financial direction of the company, in particular short-term leverage.”

KPN fell 2.6 percent in Amsterdam trading to 9.08 euros yesterday after earlier declining as much as 4 percent.

Smits-Nusteling “has informed the supervisory board that she has ultimately come to the conclusion that she does not agree with the internal governance of the company in the new executive structure,” KPN said in the statement. Simons declined to specify the nature of the disagreement with Smits-Nusteling.

The outgoing CFO, a former TNT NV executive, took the position in September 2009. Under her watch, KPN increased its dividend and stepped up share buybacks. On Nov. 1, KPN said that another board member, Baptiest Coopmans, will leave the company on April 1.

“I find it a bit late to claim that she only found out now that the changes aren’t exactly what she wants them to be,” said Frederic van Daele, an analyst at Kempen & Co. in Amsterdam. “Maybe she wasn’t content how decision-making has been spread out with the introduction of the committee,” he said, adding that Hageman is a probable candidate to become permanent CFO.

 

Cut Forecast

Forty-one-year-old Hageman, who took charge of the Belgian division in June, will be responsible for investor relations, mergers and acquisitions, fiscal affairs and treasury. Van Schilfgaarde, 47, who has worked as CFO for KPN’s fixed-line business and Getronics information-technology operations, will be responsible for control and reporting, accounting and security.

“As a team, we will be able to head the different segments decisively and efficiently, enabling us to act on changing market dynamics and customer demands,” Chief Executive Officer Eelco Blok said in today’s statement.

Blok cut KPN’s 2011 earnings forecast in April, the month he started as CEO, citing a switch in consumer communication habits and increasing use of mobile and social-media applications. He also began a restructuring plan that will eliminate 4,000 to 5,000 jobs in the Netherlands through 2015.

“The statement raises more questions than it answers,” Jos Versteeg, an Amsterdam-based analyst at Theodoor Gilissen Bankiers NV wrote in a note to clients. “We are unpleasantly surprised by the press release, but maintain our buy recommendation on KPN because of its attractive dividend return.”

 

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