KPN announced that CFO Carla Smits-Nusteling will step down from 1 April. The reason given is a disagreement over "internal governance in the new executive structure". The new CEO Eelco Blok announced already in May last year when he unveiled his 'Strengthen, Simplify, Grow' strategy that he planned to change the top management structure. The management board continues with three members CEO, CFO and Thorsten Dirks, the head of E-Plus and Mobile International), and also forms part of the Executive Committee. The latter includes also the nine people who already report directly to the management board. KPN also announced that Smits-Nusteling has declined a severance package, and she will be replaced directly, on an interim basis, by Eric Hageman, the CEO of KPN Belgium, and Steven van Schilfgaarde, the CEO of KPN Corporate Market.
That Smits-Nutseling had a problem with the decision-making structure is noteworthy. Not much has really changed, as the line of reporting is largely the same. Furthermore, the changes were long in coming. With this latest move, Blok appears to have composed a management board and executive committee nearly completely of his own design, putting a clear end to the choices of his predecessor Ad Scheepbouwer. Under Blok's watch, Baptiest Coopmans has also left the company (still on the board until 1 April, same as Smits-Nutseling), and Thorsten Dirks has been promoted to the board. Smits-Nutseling is the last board member appointed by Scheepbouwer, and the dynamics between her and Blok may have played a role in the departure.
Further it's guesswork why she may be leaving. Blok started in April 2011 with a profit warning and let it implicitly be known in December that the capex budget may not be enough. Perhaps the CEO sees further financial disappointments on the way and needs to cut the company's targets. With the background of a very high dividend return (targeted to grow to EUR 0.95 for 2013), dividend cuts already by Telefonica and Telekom Austria and a share price drop of 18 percent in 2011, it's possible the market is already betting on a dividend reduction or a smaller share buyback. The budget for the latter still needs to be set for 2012, and a halving compared to previous years to around half a billion euros seems likely. Recent developments already point to a further reduction. But only when Blok decides to cut the dividend, can you conclude that things are really going bad for KPN. Until then, we should assume that Blok wants to have complete control of the top management.
