COLUMN-Reed CEO counts cost of cash call: Alexander Smith

-- Alexander Smith is a Reuters columnist. The opinions expressed are his own --

By Alexander Smith

LONDON, Nov 11 (Reuters) - Reed Elsevier (REL.L)(ELSN.AS) has parted company with its chief executive Ian Smith after only eight months. Smith appears to be in part paying the price for Reed's unpopular share placing. Other CEOs who were forced to go cap in hand to investors for cash may also be living on borrowed time.

Despite a long list of rights issues and placings this year, very few heads have rolled. That's not to say they won't. Ousting a CEO at the same time as trying to persuade investors to stump up more cash is a non-starter. But that doesn't mean it won't happen later.

Investors can expect to exact a price for coughing up the cash companies have needed to pay for their past mistakes. And while nobody is willing to say so publicly, there appears to be a tacit agreement with a company's chairman or board that top management will have to take full responsibility in the medium term.

Of course, there are other factors at play. Smith may have surprised the market with Reed's 1 billion pound equity raising in July. But his swift departure appears to have been in part due to his ambitious investment plans, particularly in the U.S. legal publishing market. The earlier defection of chairman Jan Hommen, who oversaw Smith's appointment, to run Dutch financial group ING will not have helped.

So far those CEOs who have fallen or been forced onto their swords have been limited to a handful. Other than Smith, the exceptions in the UK include building supplies company Wolseley. It parted company with CEO Chip Hornsby two months after its rights issue.

And Hammerson (HMSO.L) boss John Richards -- who in February launched the first rights issue among indebted British real estate blue-chips -- announced he was taking early retirement in September.

Other companies -- from Germany's HeidelbergCement (HEIG.DE), France's Saint-Gobain (SGOB.PA) and Lafarge (LAFP.PA) and Switzerland's Holcim (HOLN.VX) to Rio Tinto (RIO.L) -- have all made large cash calls during the course of the year. But even after bringing out the begging bowls, the top brass at most of the corporates remain in their posts, for now at least.

Reed says Smith was the wrong man for the times. So far, he is the exception. But there are other CEOs with a rescue fundraising behind them who must be hoping shareholders will forgive and forget. Unless they can engineer a rapid turnaround of their companies, the clock may be ticking for many of them. -- For previous columns, Reuters' customers can click on [SMITH/] (Editing by Martin Langfield)