Analysts flag succession-planning uncertainty at WTW
Despite the prospect of a $1 billion termination fee which will be paid to it by Aon following the end of the proposed merger, Willis Towers Watson (WTW) still has significant issues to contend with, especially with regard to succession planning.
The simple fact is that, as matters stand, WTW shareholders have little certainty with regard to leadership of the company. Chief executive officer John Haley’s (pictured) contract has been extended, but only through to the completion of the merger, or December 31 2021 if the merger was not consummated by then.
By comparison, Aon announced it had extended employment agreements for CEO Greg Case and chief financial officer Christa Davies for an additional three years, through to April 1, 2026.
The issue of executive leadership was one of the key concerns flagged by analysts at KBW in a note put out following the collapse of the proposed merger, in which they highlighted the discrepancies between the two brokers.
“We see more go-it-alone headwinds at WTW than at Aon because of perceived CEO uncertainty at WTW,” whereas “ Aon’s just-announced CEO/CFO contract extensions give us enormous comfort in it rapidly regaining its footing in what remains a positive cycle,” said the KBW note.
KBW said that it seems a significant amount of talent has been lost from Aon and Willis Towers Watson through the prolonged process towards a now-defunct merger.
KBW was not the only voice to raise such concerns. “The biggest question when Willis reports earnings is its plan for CEO succession, as Haley was expected to retire when the deal with Aon closed,” said an equity research note from Wells Fargo.
Despite such external commentary, WTW remained bullish in its public pronouncements.
“Our team’s resilience and commitment are a source of pride and confidence. They have continued to bring to life Willis Towers Watson’s compelling value proposition to better serve our clients in the areas of people, risk and capital,” said Haley.
“Going forward, our focus remains steadfast on our colleagues, our clients and our shareholders. We believe we are well-positioned to compete vigorously across our businesses around the world and will continue to introduce important innovations to the market. We appreciate and deeply respect all the Aon colleagues we got to know through this process,” Haley added.
There is some immediate comfort to be had. In a separate announcement, WTW announced that its board of directors approved an increase of $1 billion to its existing share repurchase programme—coincidentally the same figure as the termination fee it will receive from Aon.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
