BAE’s CEO to Step Down in August 2008
When Mike Turner ascended to the position of BAE Systems CEO in March 2002, shares were at 115p and the firm’s profitability depended heavily on British and Saudi government contracts, plus Airbus. By June 2007, when Turner told a British newspaper that he wished to remain as CEO until he was 65 (about 2013), BAE had become a diversified transatlantic defense giant that no longer owned a stake in Airbus, bit did own a share price up around 450p. So it came as something of a shock when BAE announced on Oct 16/07 that Turner would be stepping down in August 2008 at age 60, with the unanimous approval of the Board. He isn’t going away empty-handed, though – Turner will receive a payout of GBP 2.36 million (about $4.8 million) about evenly divided between shares and cash, provided he meets performance targets that include an orderly handover, continues the successful implementation of the Company’s business strategy, and meets the leadership objectives set by BAE’s Remuneration Committee.
Speculation concerning the situation at BAE is rife. The surprise of the announcement after more than 40 years as a BAE employee, the timing that will forgo a 2008 grant under BAE’s Executive Share Option Plan or Performance Share Plan, and the Board’s unanimous approval, naturally led to rumors of a Board/CEO split. Especially in an environment that has featured recent Saudi corruption controversies, a US Department of Justice Investigation, et. al. Turner himself offers an amusingly straightforward explanation of his June to October u-turn in statements to the press:
“What am I supposed to say, that I’m thinking of leaving? This decision to leave is mine, supported by the board… I turn 60 next year and I want another challenge. The job of non-executive director appeals, as does becoming chairman of a company. Did people want me to say ‘I’m leaving’? If I’d done that I would have been a dead duck.”
That’s certainly true. As is usually the case in these scenarios, few people outside the company’s executive circle are likely to know the full truth of the matter. We will say that the explanation given by Mr. Turner is one of the best responses we’ve ever seen in a situation like this. BAE Executive Bio | BAE release | BAE IR re: Turner compensation | Bloomberg | The Scotsman | The Scotsman re: succession | The Times.