Bapcor Ltd (ASX: BAP) has fast-tracked the exit of its long-time Chief Executive Officer (CEO) Darryl Abotomey after there was a notable “deterioration in the relationship between the Board and the CEO”.
Subsequently, the Board has elected to bring forward Mr Abotomey’s retirement date immediately.
At open today, the Bapcor share price has fallen 8.08% to $6.24.
BAP share price
Mixed messages
Today’s news arrives just two weeks after the company announced the unexpected departure of Mr Abotomey, who had led the company since 2011.
He was set to remain in the role until February while it searched for a successor.
The initial news of the CEO’s departure came as somewhat of a shock to the market.
Subsequently, Bapcor shares fell 9% on the news.
Only in February this year, it had been agreed Mr Abotomey would extend his tenure until 2023.
“We are delighted that Darryl is extending his leadership of Bapcor through to October 2023. Under Darryl’s guidance Bapcor has been one of the top performing ASX listed companies since it listed in April 2014…” – Chairwoman Margie Haseltine, February 22
“Untenable”
Arguably, today’s announcement is more of a surprise. Mr Abotomey is well regarded by shareholders and considered central to the past success of Bapcor.
“…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 decision by the Board to effectively remove a CEO of ten years immediately infers deeper problems, which had reached a boiling point over the past fortnight.
“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” – Chairwoman Margie Haseltine, December 6
A global process is currently underway “to install a more contemporary leadership and management approach”.
In the meantime, current Chief Financial Officer Noel Meehan will step into the CEO role on an interim basis.
On a collision course
Today’s announcement is a notable change in tone from past releases made by the Board.
Improvements in governance and changing stakeholder expectations were referenced without further elaboration:
“…ensuring consistent with changing stakeholders’ expectations, an appropriate governance and oversight framework remains in place”
However, the onus will now be on the Board. Mr Abotomey was popular with shareholders and his replacement will have high expectations from day one.
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