22 August 2012 Last updated at 05:34 ET

Sir Brian Souter to step down as Stagecoach chief executive

Sir Brian's family owns a stake worth £400m in Stagecoach

Stagecoach co-founder Sir Brian Souter has signalled his intention to step down as its chief executive.

He will become chairman of the Perth-based transport group from May next year, with finance director Martin Griffiths taking over the day-to-day running of the firm.

Sir Brian's family owns a stake worth £400m in Stagecoach.

The change was announced as the company reported "good" trading in the 12 weeks to 22 July.

Sir Brian said: "I remain committed to the success of Stagecoach and consider now to be an appropriate time to plan to take a step back from the day-to-day management of the business."

His appointment comes despite a UK Corporate Governance Code recommendation that the chief executive of a company should not become its chairman.

The Stagecoach board said it had taken the step in light of Sir Brian's "unique association with the company as its co-founder and the architect of its success and his deep knowledge and understanding of the global ground transportation industry".

It added that the board believed that "retaining the talent and knowledge of Sir Brian in the role of chairman will be to the benefit of the company and all of its shareholders".

'Back-seat driving'

However, shareholder advisory body Pirc said moving roles from chief executive to chairman raised the danger of "back-seat driving".

Tom Powdrill, from Pirc, said: "These are very separate jobs, with one setting the strategy and direction of the company and the other chairing the board.

"If you have set the strategy the company has been following and the new chief executive comes in and wants to set a new direction, just how easy is it for them to do that?"

The boardroom changes, which will also see current chairman Sir George Mathewson retire as a director, comes a week after the company's joint venture, Virgin Rail Group, lost out to rival operator FirstGroup in a bid to run the new West Coast Trains rail franchise.

Virgin Rail Group will cease to operate the franchise in December.

Stagecoach said it remained shortlisted for other UK rail franchises it had applied for and was "making good progress" with its bid for the Great Western franchise.

Meanwhile, Stagecoach said in an interim management statement that it remained on track to hit full-year targets.

The firm said overall profitability had "remained good" and it continued to maintain a strong financial position.

The group is now one of the UK's biggest bus, coach and rail operators and a major operator in the United States, with a stock market valuation of £1.7bn.