All is not lovey dovey at telecommunications group Vocus.
The sudden resignations of founder James Spenceley and fellow board member Tony Grist has exposed a major falling out at board and senior management levels over the direction of the business.
In fact it was a particularly stupid attempted coup because the board flatly rejected the attempt.
In fact it sounds very much like a revolt of the old guard at Vocus against the newcomers who have brough extra business and complexity to the company as it seeks to cement its position as the country’s 4th biggest Telco.
The problems saw the shares hit a 13 month low yesterday, before closing down 2.5% at $5.49. That was after the shares fell as low as $5.25.
In a frank statement on the surprise departures, Vocus said non-executive director Mr Grist had proposed a chief executive succession plan that would have seen current chief executive Geoff Horth forced out in early next year.
Mr Spencely, who led Vocus until the merger with the Mr Horth-led M2, backed the succession idea, but the two board members met significant resistance from within the board.
“The resignations follow a difference of opinion between the departing directors and the board on the future leadership of the company,” the company said.
“Mr Grist had confidentially proposed to the board an alternative leadership framework whereby the CEO would change in early 2017, and board leadership would be formally reviewed over the course of 2017.
The pair resigned after Vocus’ board held a special meeting in Melbourne on Tuesday to consider an "alternative leadership" proposal put forward by Mr Grist, and later supported by Spenceley.
Grist’s aim was to see Horth replaced and a "board leadership" review over the next year. It is understood that meant replacing David Spence as chairman and reconsidering Craig Farrow’s role as deputy chairman.
The move was voted down, 6 votes to 2 at the board meeting and that saw Messrs Grist and Spenceley resign.
Sources said the move was building for a number of weeks and the special meeting of directors was designed to bring it to a head. Which it certainly did.
Vocus shares have fallen sharply since May – dropping a third from more than $9 to well under $6.
Vocus has bought M2, Amcom and picked up Nextgen Networks mid year from CIMIC (the old Leighton Holdings) for more than $860 million. That complex integration process is now very much up in the air. Vocus funded the Nextgen deal via a $652 million capital raising, plus debt.
"While it is disappointing to see the departing directors leave the board, these resignations are in the best interests of shareholders so we can now move forward with a fully cohesive board and executive team," Mr Spence said.
Mr Horth was appointed CEO in February after the company’s $3.75 billion merger with M2 Group, where he had been CEO since 2011.
The merged company is made up of the low-cost telcos run by M2, including dodo and iPrimus, and Vocus’ data centres and cable networks.
Vocus ranks behind Telstra, Optus and TPG Telecom.
Mr Spence said at the time of the M2 merger, shareholders were presented with a leadership team and strategy they fully supported, which was only recently reinforced with the Nextgen acquisition and raisings. But clearly the old guard from Vocus have a different idea and ambitions, and failed spectacularly.
The Vocus Board now includes Mr Vaughan Bowen (Executive Director), Mr Jon Brett (Non- Executive Director), Mr Craig Farrow (Non-Executive Deputy Chairman), Mrs Rhoda Phillippo (Non-Executive Director), Mr Michael Simmons (Non-Executive Director), and Mr David Spence (Non-Executive Chairman),” yesterday’s statement said.
"Mr Spence also confirmed the Board would soon be appointing an executive recruitment firm to undertake a search for replacement director candidates. This follows the recent appointment of an executive search firm to undertake the search for a new Chief Financial Officer.”
"The merger with the M2 business is also proceeding as planned with all integration milestones being met and the $40 million synergy target on track to be delivered by the end of FY18. Further, the acquisition of Nextgen is expected to be completed this month and integration planning is on track,” the statement added.
