Rupert Soames to retire as Serco chief

Rupert Soames is to retire as chief executive of Serco after leading the London-listed contractor for more than eight years, saying it was now “time to outsource myself”.

Soames, who steered the company to recovery after it teetered on the brink of collapse in 2013, will step down as chief executive and from the board at the end of the year.

He will be replaced by Mark Irwin, head of Serco’s UK and Europe division, who was selected from a list of internal and external candidates, the company said.

“It has been the privilege of my working life to lead Serco for the last eight years. My respect and admiration for the wonderful team of people at Serco . . . is unbounded,” Soames said in a statement.

Shares in Serco fell 6 per cent to 169p in late afternoon trading on Monday, below the roughly 270p price when Soames took over in May 2014.

That year, Serco posted a £990mn loss from revenues of £3.95bn. In 2021, the Hampshire-based group reported pre-tax profit of £192mn from revenues of £4.4bn.

Soames, a grandson of Sir Winston Churchill, became chief executive when the outsourcer was weighed down by scandals involving the manipulation of data for out-of-hours healthcare services, and for charging the UK government for electronic tags on prisoners who had died or were back behind bars.

He was poached from power supplier Aggreko with a remit to turn the group round.

Soames narrowed Serco’s focus to government contracts, during a period in which rivals Interserve and Carillion collapsed while Capita has struggled to rebuild after a series of profit warnings.

The FTSE 250 group, which runs prisons, immigration facilities, security and transport for governments across the world, was one of the providers of the UK’s much-criticised Covid-19 testing programme.

Serco also operates the Caledonian Sleeper — the train service between England and Scotland that Soames has used to visit his Highlands estate — which was hit by industrial action last year when transport workers went on strike over pay and conditions.

He kept what he called a “shit-o-meter” on his desk — a toilet brush to remind him of the gravity of the problems a company focused on public-sector contracts could face.

Soames drew the ire of corporate governance groups when he received a pay package of almost £5mn in 2020, a year when the outsourcer attracted controversy over its role in the Covid Test and Trace programme.

Irwin will be paid a basic annual salary of £800,000, slightly below Soames’s £850,000, as well as pension contributions and short-term and long-term performance-related share incentives.

He joined Serco in 2013 and previously ran the group’s Asia-Pacific division. Before Serco, he worked in private equity roles in the US and China, and for GE in the US and Australia.

“Mark’s deep knowledge of Serco in the UK, Europe and Asia-Pacific, as well as his prior experience working in the US and the tremendous results he has delivered for us in all his roles, make him the ideal person to lead the group through its next phase of growth,” said John Rishton, Serco chair.