Herrmann demotion marks another twist in LogicaCMG shake-up

By William MacNamara

FINANCIAL TIMES
Published: July 25 2007 03:00 | Last updated: July 25 2007 03:00

The management shake-up of LogicaCMG continued with the company's board asking Didier Herrmann, an executive director, to resign from the board.

The global IT services company asked Mr Herrmann to resign because he was "unable to accept changes in reporting lines" after last week's appointment of an interim chief executive, the company said.

Last week, LogicaCMG announced the appointment of Jim McKenna, formerly chief operating officer, as interim chief executive in an attempt to reassure investors after a profit warning in May led to the resignation of Martin Read, the company's architect and chief executive.

It is understood thatthe board is seriously divided over the company's future leadership in the wake of Mr Read's 14-year tenure, which was marked by a series of large acquisitions that are still being digested.

At issue are the merits of an internal or externalcandidate and specifically the likelihood of MrMcKenna becoming the permanent chief executive.

Mr Herrmann's departure represents an old-fashioned personality clash between him and Mr McKenna, a person close to the company said.

He remains head ofLogicaCMG's operations in France, Germany and Switzerland, and has only resigned from the board.

"We believe Herrmann's move should have limited or no operating impact," said Geraldus Vos, an analyst at Citigroup, in a note. "However, in our view it shows that the board is divided over the next CEO and further strengthens our case for an outsider."

Zygos, the headhunter, is compiling a shortlist of candidates for chief executive.

Mr Herrmann joined the company from Unilog, a French IT services rival, after Logica's £631m acquisition of the company in September 2005. He was Unilog's executive vice president.

He, along with LogicaCMG board members from other acquired companies, would have been a plausible candidate for chief executive.

"We continue to viewLogicaCMG as attractive on valuation," said Graeme Clark, an analyst at Piper Jaffray.