(Bloomberg) -- Royal KPN NV reversed a decision to hire Dominique Leroy, the former head of Belgian phone carrier Proximus SADP, as chief executive officer following reports of an investigation into her sales of shares at her old employer.
KPN said Sept. 5 that Leroy would leave the top job at Proximus to join the company as CEO at the start of December. Local media later reported that police conducted searches of Leroy’s home in relation to an investigation over possible insider trading. Since she stepped down from the top job at Proximus on Sept. 20, the most senior woman in European telecommunications now has no company to run.
Her troubles also represent a conundrum for KPN and Proximus, which are both under pressure to find new CEOs to guide them through intense competition in their respective markets. KPN’s leadership vacuum is yet another blow to Supervisory Board Chairman Duco Sickinghe, after current CEO Maximo Ibarra quit to lead Comcast Corp.’s Sky Italia.
“This was a difficult decision for the Supervisory Board given the track record of Mrs. Dominique Leroy as a very accomplished executive,” Sickinghe said in the statement. “However, the uncertainty around timing results in a situation, which the supervisory board considers not in the interest of KPN.”
KPN said it’s unclear how long Belgian authorities will need to conduct their procedures. KPN shares were down 1% at 12:09 p.m. in Amsterdam.
A spokesman at Proximus wasn’t able immediately to provide contact details for Leroy. A Sept. 8 statement by her explained the timing of her sale of Proximus shares on Aug. 1.
That day was the first on which new transactions were possible following a closed period that started Nov. 22, according to the statement. She’d instructed the bank the end of July to sell shares on that day, and at that time she’d been in discussion with Proximus about renewing her contract and other parties, including KPN, though she had not yet decided to leave her employer.
“I understand that with hindsight the timing can create the perception that I did this exactly prior and because of my departure. This is surely not the reason for my sale of shares,” she said in the statement. “I regret that this perception has been created, this is not in line with my values where integrity and transparency are very high.”
Joost Farwerck, chief operating officer, will serve temporarily as chairman of the management board and executive committee, KPN said Monday.
Ibarra had held ambitions to put KPN on the acquisition trail, but when this didn’t happen he turned his focus to cutting jobs and streamlining the company’s IT systems.
Any new leader would have to continue cutting costs and find fresh revenue streams since consolidation in the industry hasn’t been enough to ease competitive pressures in the Dutch market. The company has been dealing with the migration of customers to different pricing structures, which has exacerbated sales weakness in some business units.
KPN’s decision to cancel Leroy’s hiring “prolongs management uncertainty that’s not helpful at a time when KPN is executing its brand consolidation strategy and competitors are improving their performances,” Erhan Gurses, an analyst at Bloomberg Intelligence, said in a note. “It deprives the Dutch incumbent of a leader with a proven track record built in a culturally and operationally similar environment.”
(Adds Sept. 8 statement from Leroy in sixth-eighth paragraphs. Updates shares.)
--With assistance from Thomas Mulier.
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