The BT (LSE: BT-A) share price was above 300p when Jan du Plessis joined the board as chairman-designate in 2017. It had fallen to less than half that by the time he announced his intention to step down earlier this year.
BT has since announced that Adam Crozier will join the board on 1 November, and become chairman on 1 December. Can Crozier help the BT share price get back to 300p from its current 158.5p?
Unanimous choice
In announcing Crozier’s appointment, BT listed a number of attributes that made him “the very best candidate” to lead the company and “the unanimous choice” of the board. These included his “significant operational and transformational experience” and “strong track record in turning around troubled organisations.”
He first came to prominence as the young chief executive who shook up England’s stuffy Football Association at the start of the century. Following that, between 2002 and 2010, he led the turnaround of then-state-owned Royal Mail. His modernisation programme took the organisation from a heavily loss-making position to profitability.
As chief executive of stock-market-listed ITV between 2010 and 2017, his transformation of the business was equally impressive. Earnings per share increased 844% and the share price more than trebled. Following his departure, he took up the role of non-executive chairman at several companies. These include FTSE 100 firm Whitbread, the owner of Premier Inn.
Strong pairing
BT’s chief executive, Philip Jansen, has been with the company for two years. Previously, he overhauled payment processing firm Worldpay. He invested boldly for growth and led the integration of the company’s merger with US peer Vantiv.
Some reports suggest Jansen became frustrated with BT’s outgoing chairman and the speed at which BT was taking key strategic decisions. The chief executive’s job is to develop and recommend the group strategy and budget to the board for approval and to execute the strategy once agreed by the board. The chairman oversees the board’s consideration of the strategy.
I think in Crozier — himself known for bold transformation programmes — Jansen is likely to have a more supportive chairman. And one whose experiences can provide additional valuable input. I reckon it’s a very strong CEO-chairman pairing. I’m hopeful it can take BT — and its share price — onwards and upwards.
Can the BT share price get back to 300p?
Despite my optimism, I’m mindful of one of the great Warren Buffett’s comments on management. He said: “With few exceptions, when a manager with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.”
Now, there’s an argument BT doesn’t enjoy great fundamental economics. For one thing, competition is intense. As such, there’s a risk of Buffett’s above scenario playing out. The company’s high level of debt and pension deficit are also a bit of a concern for me. For example, there’s a higher-than-average risk of a dilutive equity fundraising being required somewhere along the line.
Nevertheless, I’m impressed by both Crozier and Jansen’s records of transforming businesses. With BT trading at just eight times current-year forecast earnings, I’m hopeful the arrival of Crozier can help get the share price back to 300p in due course. It’s a stock I’d like to buy at its current sub-160p level.
