LONDON -- Despite an embarrassing performance at the summer Olympics, security firm G4S (ISE: GFS.L) is standing by its chief executive.
Nick Buckles, who's been at the company for nearly 30 years, will retain his post. Chief operating officer David Taylor-Smith and head of global sales Ian Horseman Sewell were not so lucky. Both directors resigned in the wake of the company's recent internal review of how it mishandled the Games.
Buckles, who admitted that the Games staffing episode had been a "humiliating shambles," was not guilty of any major mishaps, the company said in the report. They also said it was in the best interest of the company and its shareholders for Buckles to remain at his post.
"While the CEO has ultimate responsibility for the company's performance, the review did not identify significant shortcomings in his performance or serious failings attributable to him in connection with the Olympic contract," G4S said in a statement.
Shareholders may have reason to celebrate, as G4S has largely prospered under Buckles, who has presided over a share price rise of some 76% since being elevated to group CEO in July 2005.
But Buckles has work to do after his firm's royal mishandling of the Olympics security project, in which G4S fulfilled 83% of contracted shifts but failed to provide the required 10,400 security guards, forcing the government to step in with military personnel. Investors have worried that the Olympics affair could jeopardize G4S's relationship with the government, a core customer, at a time when Britain wants to heavily involve the private sector in running public services.
Earlier this month, a new report from the Confederation of British Industry claimed that government could save 23billionpounds by opening up more public services to the private sector. This could mean big business for companies like G4S -- assuming it can put the Olympics fiasco behind it and find a way to keep landing big contracts -- as well as MITIE Group and Rentokil Initial.
Government deals account for more than half of G4S's 1.8 billion pounds of revenue in the U.K. -- and are responsible for more than 20% of its pipeline of potential work here.
G4S, which has estimated its loss on the Olympics contract at around 50 million pounds, is the world's biggest private security company, with more than 650,000 staff worldwide.
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