So-called 'social issues' have emerged as potential game changers at two companies in the spotlight, with a switch in the chair at IMF Bentham and the Programmed Maintenance Services bid for Skilled Group.
In June last year, litigation funder IMF Bentham told the ASX that former Ferrier Hodgson partner Andrew Saker would join the company as managing director and Hugh McLernon would step down from the board.
This week it emerged that McLernon had changed his mind and, contrary to the June 13 statement, would stay on the board and as an executive director.
Chair Rob Ferguson brought forward his departure date in protest and the company is now looking for a new chair.
Good luck with that project because McLernon’s change in plans highlighted one indisputable fact -- the company may be a listed vehicle but it is McLernon’s baby and the brilliant operator has no plans to relinquish control any time soon.
One corporate director, Clive Bowman, will step down from the board but stay as an executive and another, John Walker, has given notice he will quit in 12 months.
The concept of former chief executives staying on the board is anathema to any governance student. One of the great ironies is that IMF -- a company which makes its money from the corporate snafus of others -- is marching forward with a fundamentally flawed governance structure.
Just how strong the next chairman will be can be judged by whether his or her acceptance is contingent on McLernon stepping down.
Skilled’s former chief Mick McMahon and Programmed chief Chris Sutherland last year worked out an agreed deal to combine the two companies, with McMahon as the first boss and Sutherland replacing him after 18 months or so.
The proposal would have Skilled amounting to some two thirds of the combined value and Programmed one third.
The merger in part was based on the fact that between 25 and 30 per cent of each of the merged businesses relied on oil and gas and Programmed was particularly reliant on oil and gas construction.
These are not exactly boom markets right now.
When the board saw the proposal they rejected it more for the fact it would mean some (not the respective chairs) would lose their corporate board seats and other such social issues, as opposed to deal value.
With the chance for expansion killed, McMahon walked and Programmed chair Bruce Brook saw the chance to pitch a nil premium merger based on the fact the highly regarded McMahon was gone.
The market is unimpressed and the deal is going nowhere.
This article was first published in The Australian. Reproduced with permission.