The FTSE 250 firm said David Martin would take up the position with immediate effect, replacing former chairman Wolfhart Hauser who stepped down in June.
READ: FirstGroup joint venture awarded West Coast rail franchise
Hauser’s departure followed an attempt to oust him and six other board members, including incumbent chief executive Matthew Gregory, by activist investor Coast Capital, which currently owns around 10% of FirstGroup.
Coast’s efforts to get rid of Hauser were also backed by several other institutional investors including Schroders and Columbia Threadneedle, which own around 9% and 10% of the firm respectively, although at the emergency meeting the hedge fund failed to attract enough support to oust any board members.
Interestingly, Martin had been proposed by Coast as a potential new board member as part of its attempts to overhaul the company’s leadership; however, at the time he did not confirm his willingness to join the company.
David Robbie, FirstGroup’s interim chairman, said Martin had “significant experience” in business turnaround and performance improvement in the transport sector and would be “invaluable” in driving forward the group’s plans to “rationalise” its portfolio, which will involve the sale of its Greyhound US bus business.
Martin will also have a new part of the business to handle after FirstGroup, in a joint venture with Italian rail operator Trenitalia, was awarded the West Coast rail franchise, which it is due to begin operating on 8 December.
In a note, analysts at Liberum, which have FirstGroup at a ‘buy’ rating and 140p target price, said they expected the news of Martin’s appointment to be “welcomed by shareholders who have been calling for change on the board”.
Meanwhile, Coast Capital said in a statement that it was "thrilled" by Martin's nomination and that his appointment marked a "much needed change" at the firm.
In late-morning trading on Thursday, the shares were up 5.2% at 120.6p.
--Adds broker comment, adds Coast Capital statement and updates share price--