After a terrible week for the Nuix Ltd (ASX: NXL) share price, it has bounced back today. Why is the Nuix share price rebounding?
NXL share price
Corporate governance is the focus
After the apology from CEO and Managing Director, Rod Vawdrey, Nuix has announced a few plans to strengthen corporate governance.
First, it will establish an independent board sub-committee comprised of three independent directors. It will liaise with external advisors and Nuix’s internal legal and risk teams.
Secondly, Nuix will expand its board from five members to include additional independent non-executive directors. It has commenced an international search for potential appointees.
The company indicates it prefers Australian-based candidates with experience in international business, technology, finance and accounting, governance, and risk management.
My thoughts
Let’s remind ourselves what all the commotion was about last week. Major news publishers revealed concerns regarding the alleged high turnover in Nuix’s engineering department and senior executives asserted that the company had, “lost focus, lost customer-centricity and stopped innovating” in 2019.
As mentioned in this article by my colleague, Patrick Melville, the Glassdoor reviews do not paint a particularly great impression of Rod Vawdrey and the culture at Nuix.
If we consider the aforementioned initiatives alongside the initial concerns, I don’t think these changes address the key issues.
In my opinion, the underlying issues surround the work culture and misalignment between management and its employees.
Whilst additional directors may help Nuix’s cause, I would have preferred to see some detailed plans on how management is going to foster a better culture.
Investors should also be mindful that executive directors are not cheap, which raises the question of whether this is a value accretive play.
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