Orica (ORI) shares shed more than 5% in value, or more than $370 million after CEO Ian Smith’s departure was surprisingly revealed – with a news-making set of claims around that decision which involve a senior female executive.
The claims made it easier to understand the veiled reference in the statement from Orica that the company was looking for a new CEO who would be less confrontational than Mr Smith was.
Orica chairman Russell Caplan referred to the change in CEO type in the statement when he said the company will “transition to a new leader with a different management style who will consolidate and build on the foundations that have been laid".
The shares slid 5.2% or just over $1 a share yesterday to end at $18.20. That’s a fall of around $375 million.
ORI 1Y – Orica boss Ian Smith steps down
Mr Caplan said in yesterday’s statement to the ASX that the board and Mr Smith had agreed on a timetable for Mr Smith to step down and a global search for a new CEO is underway.
Mr Smith, known for his abrasive and confrontational management style, has seen a number of high level staff leave since he took on the top job in February 2012.
The share price was around $25.60 at the time, so the loss in value has been substantial as global commodity prices have slumped, hurting demand for the company’s explosives and other services and products. The high value of the Aussie dollar also hurt Orica.
Mr Smith was previously CEO of Newcrest Mining and oversaw the value-destroying purchase of Lihir.
But at Orica he has cut and hacked and turned the company into a pure mining services business after selling off its chemicals business late last year and then announcing a $400 million buyback.
Now an international search for a new CEO is underway, but it would seem the ripples from his time at the company, especially this year, will be felt for some time yet.
According to a report in Fairfax Media yesterday afternoon, Mr Smith confirmed those reports of a clash with a senior female executive earlier this year.
"Orica’s chief executive Ian Smith said he is "extremely disappointed" that his sometimes aggressive and confrontational management style has led to his sudden departure from the explosives giant.
"But after he returned from a holiday over Christmas, an aggressive outburst from Mr Smith towards his now departed general manager of investor relations Karen McRae sparked discussions with the board about transitioning to new leadership.
"I’m extremely disappointed. I was changing and there was an incident that coloured where we were going [as an organisation]. Sometimes I go beyond being robust and become aggressive," Mr Smith said.
Mr Smith said his turnaround strategy, which involved organisational restructuring, heavy cost-cutting and redundancies, and the transition of Orica to become a pureplay mining services company had taken its toll on him.
"My wife told me it [the job] was having an effect on me. The emotional and physical toll was too much. There is no excuse for it [the outburst]. It should not have happened and I’ve apologised to the person a number of times,” he said.
With that in mind it’s no wonder there was boardroom and managerial unrest at Orica.
