Royal KPN NV, the largest Dutch phone company, said ChiefFinancial Officer Carla Smits-Nusteling has stepped down because ofdisagreements about governance, the second departure of a boardmember in two months.

Eric Hageman, KPN's head for Belgium, and Steven vanSchilfgaarde, chief of the Dutch corporate business, will becomeinterim CFOs with immediate effect, the Hague-based operator saidin a statement today, adding that it's looking for a permanentreplacement as soon as possible. Smits-Nusteling, 45, will leaveApril 1. In November, KPN said that another board member, BaptiestCoopmans, will also leave on April 1.

Under the new executive structure announced in May, managementboard members meet directly with unit chiefs on matters thatconcern their respective business in an executive committee, saidStefan Simons, a KPN spokesman. The changes, which took effect thisyear, allow for more direct control and decision-making than theprevious procedure, where various unit boards reported to themanagement board, he said.

“A further change in senior management at KPN will be greetedwith some nervousness,” Stuart Gordon, an analyst at BerenbergBank, wrote in a note to clients. “We expect that there will bespeculation that the CFO is leaving either because there could beanother profit warning in the pipeline or that there was discord onthe financial direction of the company, in particular short-termleverage.”

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

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

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

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

Cut Forecast

Forty-one-year-old Hageman, who took charge of the Belgiandivision in June, will be responsible for investor relations,mergers and acquisitions, fiscal affairs and treasury. VanSchilfgaarde, 47, who has worked as CFO for KPN's fixed-linebusiness and Getronics information-technology operations, will beresponsible for control and reporting, accounting and security.

“As a team, we will be able to head the different segmentsdecisively and efficiently, enabling us to act on changing marketdynamics and customer demands,” Chief Executive Officer Eelco Bloksaid in today's statement.

Blok cut KPN's 2011 earnings forecast in April, the month hestarted as CEO, citing a switch in consumer communication habitsand increasing use of mobile and social-media applications. He alsobegan a restructuring plan that will eliminate 4,000 to 5,000 jobsin the Netherlands through 2015.

“The statement raises more questions than it answers,” JosVersteeg, an Amsterdam-based analyst at Theodoor Gilissen BankiersNV wrote in a note to clients. “We are unpleasantly surprised bythe press release, but maintain our buy recommendation on KPNbecause of its attractive dividend return.”

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