Newly announced Thomson Reuters president and chief executive officer Steve Hasker is seen in Toronto, on Feb. 24, 2020.MARK BLINCH/Reuters
Thomson Reuters Corp. named Steve Hasker, a former president of Nielsen Holdings, as its new chief executive Tuesday, succeeding Jim Smith, who had been at the helm of the news and information provider for eight years.
The change, which takes effect March 15, comes as the company raised its dividend and announced better-than-expected earnings for the fourth quarter.
“I couldn’t imagine a better way to go out, in terms of our results and in terms of the person to whom I’m passing the baton,” Mr. Smith said in an interview.
Mr. Hasker will also replace Mr. Smith on the board of directors. Mr. Smith will help with the transition into 2021 and become chairman of the Thomson Reuters Foundation, which focuses on media freedom and access to justice.
Thomson Reuters posted a 4-per-cent revenue gain to US$1.58-billion in the fourth quarter, which the company said was primarily due to higher recurring revenue from subscription-based products, which was up by 6-per-cent. Each of the company’s largest businesses, which focus on legal, corporate and tax professionals, saw revenue gains.
Growth in the legal division, now the largest at Thomson Reuters, was driven partially by HighQ, a cloud-based platform for legal workflow the company acquired last year, and as existing customers upgraded to Westlaw Edge, a legal research program that incorporates artificial intelligence.
Adjusted earnings beat analyst expectations and rose to US$216-million or 37 US cents per share, up from US$135-million or 19 US cents in the same quarter last year. Analysts expected 33 US cents a share, according to IBES from Refinitiv.
For the full year, Thomson Reuters boosted revenue by 7-per-cent to US$5.9-billion, and grew earnings per share to US$1.29 on an adjusted basis. The company also approved an 8-cent annual dividend hike to US$1.52 per share.
“This was really driven by strong performance in our underlying subscription businesses, and that’s gratifying because that’s sustainable and repeatable revenue,” Mr. Smith said of the results.
In addition to the CEO change, Thomson Reuters said Mike Eastwood, senior vice-president and head of corporate finance, will succeed Stephane Bello as chief financial officer. Mr. Bello will become vice-chairman with responsibility for the company’s investment in Refinitiv.
Under Mr. Smith’s tenure, Thomson Reuters has become a more focused entity. He spun off Refinitiv, the company’s financial and risk division, as a separate company to concentrate on the legal, corporate and tax industries, along with the Reuters news business.
Investors have bought into the strategy. Growth in Thomson Reuters shares has been sluggish in recent years, but the stock price surged more than 80 per cent since the spinout was announced.
“Jim Smith has done a fantastic job since becoming CEO,” wrote National Bank Financial analyst Adam Shine in a recent note. “He’s a tough act to follow.”
Mr. Smith, 60, started as a journalist for a small weekly newspaper in Kentucky, and joined Thomson Newspapers in 1987. He went on to hold several management titles, including global head of human resources and chief operating officer for Thomson Corp. In 2007, Thomson bought Reuters Group PLC for roughly US$17-billion. The deal was struck on the eve of the financial crisis, and the company’s share price subsequently dropped. “We had a lot of work to do,” Mr. Smith said.
When he took over as CEO in 2012, the company’s biggest division was in turnaround mode as it worked to catch up to chief rival Bloomberg LP, whose desktop terminals remain popular with banks and hedge funds. Mr. Smith cut costs and slimmed down Thomson Reuters with the US$3.6-billion sale of its intellectual property and science business in 2016. The company said in December, 2018 that it would eliminate 3,200 jobs by 2020 and reduce the number of offices around the world by 30 per cent.
Perhaps his biggest move, however, was to sell a 55-per-cent stake in Refinitiv in 2018 to a consortium led by U.S. private equity firm Blackstone Group Inc. As a standalone company, Refinitiv said it would boost revenue growth by slashing costs and becoming more nimble.
In August, the London Stock Exchange announced a deal to purchase Refinitiv in a transaction valued at US$27-billion including debt. Blackstone and Thomson Reuters will retain a 37-per-cent stake in the combined entity, but the company has said it plans to sell down its holdings as lockup provisions expire. A regulatory review of the transaction is not expected to conclude until the second half of this year.
How Thomson Reuters will spend the cash it receives if it sells down its stake could be one of the key questions facing incoming CEO Mr. Hasker. After serving as president of data and measurement company Nielsen, Mr. Hasker was a top executive at Hollywood talent firm Creative Artists Agency and a senior adviser to U.S. private equity firm TPG Capital. He also worked as a media consultant for McKinsey & Co.
“Steve Hasker is known for being innovative, with immense integrity, intellect and people skills,” said Thomson Reuters chairman David Thomson in a statement.
Mr. Smith, who was involved in the search for his replacement, said the company’s succession planning efforts kicked into a new gear after he turned 60. “What we’re going to see from Steve is someone who’s experienced with information and technology,” he said, “and is really going to help us take that next step as we connect with our professional customers.”
Thomson Reuters has made four acquisitions in the past couple of years to grow its existing business divisions, and it has another US$800-million to deploy. “We have a pretty robust pipeline of potential deals," Mr. Bello said on an earnings call Tuesday. “The initial priority, I promise you, will be to try to see how many of these potential transactions we can land.”
Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.
With files from Reuters
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Joe Castaldo