A shareholder revolt is looming at WH Smith ahead of the troubled travel retailer’s annual meeting next month.
The firm is already under fire for urging investors to back its auditor, PwC, despite its failure to spot a huge accounting blunder in its key US unit that wiped £600 million off WH Smith’s share price.
Now it can be revealed that – in an unusual move – the retailer is also proposing its interim boss joins the board.
Andrew Harrison replaced Carl Cowling as chief executive on a temporary basis in November. A search for a permanent successor is under way.
In recommending him to the board, WH Smith says Harrison – who led its UK travel arm – brings ‘considerable travel retail experience and a deep understanding of the group and its strategy’.
But one leading shareholder described the move as ‘very clunky’ and ‘not a great look’, adding: ‘Harrison may have thrown his hat into the ring but why put him on the board when he is still auditioning for the top job? I find that a bit strange.’
Pressure: Andrew Harrison replaced Carl Cowling (pictured) as chief executive on a temporary basis in November
WH Smith also faces criticism for not yet beefing up its board by hiring directors with experience of the US retail market, which has long been earmarked for growth.
‘There’s been plenty of time to find people. And they’ve known about the accounting issues in the US for more than four months,’ said the shareholder, who has also sounded out other City fund managers invested in the company about the ongoing ‘status quo’.
‘Shareholders have concerns,’ they added. ‘It’s not like everything needs to be done in one go but there is a lot of work to be done.’
Another focus for shareholder discontent could be Annette Court, who has chaired the board since 2022 and is up for re-election at the annual meeting.
WH Smith is under investigation by the Financial Conduct Authority after profits in its US arm were overstated by £30 million. Revenue that should have been allocated to later years was booked as soon as promotional deals were done.
The Financial Reporting Council may also launch an inquiry into PwC’s signing off the accounts.
PwC replaced Deloitte as WH Smith’s auditors in 2014 – the year a similar scandal erupted at Tesco, where profit was also overstated, albeit on an even bigger scale. The grocer soon ditched PwC as its auditor in favour of Deloitte.
WH Smith plans to claw back £1.5 million in bonuses paid to Cowling and former finance chief Robert Moorhead, on whose watch the accounting scandal emerged.
WH Smith said: ‘Andrew is interim CEO and it is right that while he fulfils this vitally important role, he is on the board and accountable to the board.’
PwC declined to comment.
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