Smiths Group plc is pleased to announce the appointment of Andrew Reynolds Smith as its new Chief Executive. He will join on 25 September 2015. Andrew, 49, is currently Chief Executive of GKN Automotive, the world’s leading manufacturer of driveline systems and powder metal components. With some £4.4bn of revenues and 31,000 employees across 22 countries, GKN Automotive is the largest division of FTSE-100 company GKN plc.
Smiths Chairman, Sir George Buckley, said: “I am absolutely delighted that we have attracted someone of Andrew’s calibre as our new Chief Executive. Andrew has almost 20 years’ experience running large, complex global industrial engineering operations with a track record of delivering turnarounds and above market growth rates. His career has equipped him to grow businesses through innovation and technical excellence as well as through targeted M&A. Smiths will greatly benefit from his engineering insight and leadership skills.
“Philip Bowman will continue as Chief Executive until he hands over to Andrew. On behalf of the Board, I would like to thank Philip for his invaluable contribution to Smiths over the past eight years. He has delivered improved margins, cash, and returns despite difficult trading conditions in one of the worst economic recessions in living memory. There is no doubt he leaves the business in substantially better shape than when he joined. The Board passes along its fervent good wishes to Philip for the future.”
Andrew Reynolds Smith said: “I’m very pleased and have a great feeling about this appointment. Smiths is a very special company with high quality global businesses and an enviable heritage of quality engineering and innovation. I am excited by the opportunity to take Smiths into its next phase of growth and development. I look forward to joining the management team of such an outstanding business positioned strongly in markets around the world.”
Andrew has held various senior management roles across different divisions at GKN since joining in 2002 and was appointed an Executive Director of GKN plc in 2007. He previously held various senior management roles in a number of engineering businesses, including Ingersoll Rand, Siebe plc (now Invensys plc) and Delphi Automotive Systems. Andrew is currently a non-executive director of Morgan Advanced Materials plc and Vice President of CLEPA (the European Association of Automotive Suppliers).
Statutory and other disclosures
Andrew Reynolds Smith is currently a director of Morgan Advanced Materials plc. There are no other directorships to disclose in respect of paragraph 9.6.13R (1) and no details to disclose in respect of paragraph 9.6.13R (2) to (6) of the Listing Rules.
Andrew Reynolds Smith’s service contract, remuneration and benefits will be consistent with the Smiths Group directors’ remuneration policy approved by shareholders at the Annual General Meeting in November 2014. A summary of the key terms is provided here and further detail will be set out in the Company’s remuneration report following his appointment.
His base salary will be £780,000 and he will be eligible for an annual bonus of up to 180% of base salary, one third of which will be deferred into Smiths Group shares. He will also be eligible for an annual award under the company’s LTIP of up to 300% of base salary. Additionally, he will receive a pension allowance of 25% of his base salary, private healthcare and other customary benefits worth c. £200,000 in total.
As a consequence of joining Smiths Group, Andrew is expected to forfeit certain bonus and long term incentives from his current employer. In order to compensate him for that, he will (a) be entitled to a cash payment calculated by reference to the pro-rated 2015 annual bonus foregone in respect of his current employment, (b) receive a one-off restricted stock award over 86,693 Smiths Group shares and (c) receive a one-off performance share award over 133,010 Smiths Group shares. The restricted stock award will vest as to 35% on 30 June 2016 and as to 65% on 30 June 2017. The performance share award will vest up to 60% following the announcement of the Company’s results for the 2017/18 financial year, up to 20% following the announcement of the Company’s results for the 2018/19 financial year and up to 20% following the announcement of the Company’s results for the 2019/2020 financial year. Vesting of each tranche of the performance share award will be subject to satisfaction of the same performance conditions that apply to awards made under the Company’s LTIP vesting at the same time.
Andrew Reynolds Smith’s service contract requires 6 months’ notice of termination by him and 12 months by the Company. The Company may also terminate his employment by making a payment in lieu of notice (PILON) equivalent to the value of his base salary and benefits set out above (including pension allowance but excluding bonus) in respect of any unserved period of notice. The service contract contains specific provisions enabling a reduction in any phased PILON payments in the event that he finds alternative employment during the notice period.