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03 October 2012 | Education | Pearson plc

John Fallon to Succeed Marjorie Scardino as Pearson’s CEO

​Pearson has announced that Marjorie Scardino has decided to step down as Pearson's chief executive at the end of 2012. John Fallon will succeed her as chief executive on 1 January 2013, and joins the Pearson board with immediate effect.

John Fallon has been chief executive of Pearson's International Education division since 2008 (and before that chief executive for Europe, Middle East and Africa since 2003) and is responsible for education businesses outside the US including in fast-growing markets such as China, India, Brazil and Southern Africa. With more than 15,000 people in 70 countries, this division is fundamental to Pearson's growth strategy. Under John's leadership, International Education sales have increased from £322m to £1.4bn and profits from £12m to almost £200m in the past decade.

Marjorie Scardino joined Pearson as chief executive on 1 January 1997. Over the past 16 years, she has led the company's transformation from a diverse conglomerate into the world's leading learning company. During her tenure, sales have tripled to nearly £6bn and profits grown more than three times to a record high of £942m in 2011. At a time of profound change in the media and publishing industries, she successful led the Company from traditional print publishing businesses to digital and services businesses. Pearson expects to generate more than half its revenues from digital and services businesses in 2012.

Pearson's chairman Glen Moreno said:

"Under Marjorie's leadership, Pearson has fundamentally shifted its business portfolio towards all kinds of learning, its geographic exposure towards fast-growing economies and its product mix towards digital and services. It has been a radical and highly successful transformation. I know that many of Pearson's shareholders, customers and people will join me today in applauding her enormous contribution to the company.

John is an experienced and effective leader who has planned and led the tremendous growth of our international education business over the past decade. He is an outstanding executive to build on Marjorie's many achievements."

John Fallon said:

"Marjorie's legacy is a company with a strong performance record, a deep commitment to its wider social purpose and a unique culture. I am proud to be part of the company; it is a tremendous honour and responsibility to be asked to lead it.

Pearson has a clear position of leadership in global learning and publishing, with strong foundations for growth in technology, services and developing economies. Our challenge is to seize those opportunities in an era of tremendous industry change."

Marjorie Scardino said:

"For more than 160 years, Pearson has stood for integrity, quality and business strength. It has been a privilege to be part of such a great company for a small part of its history.

 Though we've changed the company beyond recognition from its form in 1997, we are still in the foothills of the climb to make all kinds of learning more accessible and more effective for more people.

 I know that John, the board, the senior team and our 40,000 people have the bravery, imagination and decency to lead the company to new ways of achieving these goals, while holding on to the traditions and values that make Pearson unique."

Comment:

​Marjorie Scardino has been one of the most effective CEOs in the last two decades and is arguably the world’s most successful female leader of a large corporation.

Under her leadership, Pearson became the global leader in the education market with revenues in excess of $6.5bn and successfully managed and exploited the transition from print to digital media.

Scardino successfully imbued her own high standards and ethics into the heart of the Company. Her legacy is clear. Pearson not only succeeded as a business, able to generate excellent operating profit margins (2011: 15.7%), operating cash flows to sales (2011: 16.8%) and returns on tangible assets (2011: 18.3%) which naturally delighted shareholders but also delivered affordable and effective learning solutions to millions of learners around the world.

Evidence of high ethical standards can be seen in the Company’s Annual Report. It is a delight to read, not just because it is beautifully presented with great clarity, stunning graphics and links to video content befitting the market leader in digital media but also because it captures in words and numbers the very essence and values at the core of business. This is reflected in honest and transparent accounting. For example, the Company chooses to expense integration costs associated with its new acquisitions rather than treating them as exceptional or losing them in fair value adjustments as so many quoted companies do.

The Company also produces a useful reconciliation showing operating cash flow, which is correctly stated after both CAPEX and internally generated intangibles. The Company also help investors understanding of the underlying business by clearly differentiating between amortisation of intangibles arising on acquisitions from amortisation resulting from purchased or internally generated intangibles.       

Majorie Scardino will be a hard act to follow, although John Fallon has many of the right qualities. He is bright, articulate and is good with people. His business credentials have been amply demonstrated by his successful stewardship of the Company’s international education division. In his youth he was an elected executive of the National Union of Students and later an adviser to John Prescott, the former Deputy Prime Minister, suggesting he has the necessary political skills for operating effectively in the education market. 

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