THERE was an abrupt change at the top of one of the biggest FTSE 100 companies today when British American Tobacco parted with CEO Jack Bowles and promoted finance director Tadeu Marroco to replace him.
Bowles, 59, goes with immediate effect and is in talks about a compensation package.
Since he was paid £9.6 million last year that is likely to be a hefty pay-off, which could irritate shareholders concerned about executive pay. Some had already complained about an increase in Bowles’s basic salary.
Marroco, a 30-year company veteran, will be tasked with pushing BAT’s shift to vaping products and away from traditional tobacco. BAT, valued on the stock market at £75 billion, owns brands included Vype, Kool, Pall Mall and Dunhill.
It is one of the ten biggest London-listed stocks.
Last month BAT was fined $629 million by the US Department of Justice to resolve allegations of bank fraud and sanctions violations for doing business in North Korea.
It is not clear if this was a factor in the board’s decision to replace Bowles. City sources say it was simply the right time to make a change as the company pivots.
Chairman Luc Jobin said: "To fully deliver on our transformation in a fast-changing environment we must continue to evolve as a high performing and agile consumer goods company. In considering succession, the Board recognised Tadeu’s outstanding track record of developing teams that deliver on our transformation alongside a consistent focus on strong execution and financial performance.”
Marroco, a Brazilian, will be paid a basic salary of £1.34 million plus £200,000 into his pension. He will plainly earn much more than that with bonuses and share options.
Under BAT rules, he will be expected to build up share ownership equal to five times his pay to ensure his interests are aligned with other investors.
He said: “I wish to thank Jack who has been instrumental in establishing our A Better Tomorrow strategy. Having been at the centre of the formulation of this strategy, I am convinced that this is the right strategic path for BAT.”
Vaping products now account for £3 billion of BAT sales, about 15% of the total. The category is expected to become profitable next year.
BAT’s statement said “information in respect of Jack Bowles departure from the Board will be available on bat.com in due course”. That is likely to be in days rather than weeks.
Russ Mould at AJ Bell said: ““It’s never a good look when a company says its chief executive is leaving with immediate effect, and after only four years in the job. This suggests something is not right in the business.”
Marroco, 56, himself got £4.9 million in total pay last year. He will surely do better than that as CEO.
His interim replacement as finance chief is Javed Iqbal, presently director of digital and information.
Bowles said: “It has been my privilege to lead BAT since 2019. In the last four years we have set out to transform the business towards A Better Tomorrow through a focus on growth of New Category consumer brands, which account for almost £3 billion of revenue. It is now the time for a change of leadership to take the business to the next level.”
