FirstGroup chief to step down after pressure from shareholder
Matthew Gregory to leave in September amid criticism from US hedge fund Coast Capital
First published on Tue 27 Jul 2021 04.38 EDT
FirstGroup, one of the UK’s largest bus and train operators, has announced its chief executive is to step down, just a day after the firm’s biggest shareholder called for his resignation.
Matthew Gregory, who has been chief executive since 2018, will step down after the company’s annual shareholder meeting on 13 September.
FirstGroup’s chairman David Martin, a transport veteran, will become executive chairman after the AGM, until the Aberdeen-based company finds a permanent chief executive. The firm said a “comprehensive search is under way” for a new boss.
On Monday, Coast Capital, the New York-based hedge fund that owns about 15% of the group, demanded the resignation of Gregory and two other board members for failing to prevent the sell-off of the bulk of its American business.
Gregory said FirstGroup was “positioned to emerge from the pandemic as a resilient and robust business”, adding “I have decided the time is right for me to move on to new opportunities”.
Martin said Gregory had “made a significant contribution to FirstGroup” since joining the company in 2015, initially as chief financial officer, before taking over the top job.
“He leaves FirstGroup a more focused, resilient and flexible organisation, well positioned to benefit from the many opportunities ahead,” Martin said.
The UK’s largest bus company, and an operator of rail franchises including Avanti West Coast and Great Western Railway, FirstGroup has been looking for some time to depart North America in order to focus on its British operations.
Last week, FirstGroup completed the $3.1bn (£2.2bn) sale of its FirstStudent business, the biggest school-run operator in the US which has about 43,000 yellow buses, as well as FirstTransit, which provides outsourced public transport.
FirstGroup sold the American businesses to Swedish group EQT Infrastructure, nearly three months after the sale was first announced.
The sale was approved by just over 60% of FirstGroup’s shareholders at a meeting in May, when the company promised to increase investor returns by more than a third (37%) to £500m on the back of the sale.
However, Coast had argued that the price for the US school and city bus services was too low, and had earlier described it as a “terrible deal”.
The hedge fund has long opposed FirstGroup’s turnaround plans and decision to focus on UK road and rail services. It also criticised the management for trying to sell its US operations during a pandemic, when travel restrictions had reduced their perceived value.
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