The departure of Bapcor CEO, Darryl Abotomey has turned toxic and he is out the door with immediate effect, not early next year, Bapcor told surprised investors on Monday in a statement to the ASX.
Bapcor is a major retailer of auto products and controls the well-known Autobarn chain which is a major rival to Repco and Super Retail’s Super Cheap Auto. It has grown strongly under Mr Abotomey since listing in 2014.
He has been with the company for 10 years and his surprise departure on February 28 next year was only announced last month – on November 24 – news that saw the shares tumble 10% at the time.
At the time there was no sign of any problems, although smart analysts had noted a change in tone in the company’s statement from the full year results and the November announcement about the CEO’s immediate future.
Yesterday Bapcor told the market that what it claimed was a “marked deterioration” in the relationship between Mr Abotomey and the company’s board had forced the CEO’s immediate departure.
Bapcor had announced in late November that Mr Abotomey would retire on February 28 after 10 years with the company, an announcement that was communicated as a mutual agreement between the board and the executive.
On Monday the company’s board said they and Mr Abotomey had made the decision as part of succession planning initiated over a year ago, with an agreed understanding that a change in leadership would be “in the best long-term interests of all shareholders”.
However, the relationship between the CEO and the board appears to have rapidly fallen apart, with Mr Abotomey being terminated immediately by the board, effective today. He will be paid in lieu of his notice period.
“Since the joint announcement of Mr Abotomey’s retirement, there has been a marked deterioration in the relationship between the Board and the CEO, such that Mr Abotomey’s position as MD and CEO has become untenable,” the company said.
“By unanimous decision, the Non-Executive Directors and Chair of the Board have taken steps to exercise Bapcor’s rights and has now elected to bring forward his retirement end date as CEO and director of Bapcor immediately.”
Bapcor’s board said the leadership transition would be an opportunity to install someone with a more “contemporary” leadership and management approach.
The company had intended that non-executive director Mark Powell would step in as acting CEO. However, Mr Powell is not immediately available, forcing the board to instead appoint Noel Meehan, the company’s chief financial officer.
“[Noel] has an in-depth understanding of the business, our future growth strategy and the needs of our team members, and we are grateful that he can step in and ensure a seamless transition,” Bapcor chair Margie Haseltine said in the statement.
“We are disappointed to be taking this step earlier than anticipated and thank Mr Abotomey again for his contribution to the growth of Bapcor since its IPO.”
Bapcor shares were trading at $8.25 before Mr Abotomey’s retirement was announced.
The stock dropped more than 5.6% to $6.41 yesterday.
That’s a fall of 25% in two weeks. Ouch!
Governance and management board relations can be quite value-destroying at times if they don’t have the right settings.