Australian billionaire Richard White and co-founder of logistics software company WiseTech Global this week announced he will step down from his role as chief executive following allegations of inappropriate behaviour.
The allegations have reignited questions about the roles and responsibilities of company directors, and whether they provide enough scrutiny and scepticism of their CEOs.
The allegations are still under investigation, but WiseTech isn’t the only publicly listed company that’s in crisis management because of claims against high profile executives.
On Thursday, WiseTech released a statement to the ASX, that Mr White, 69, is stepping down from the company’s board and as its chief executive.
The company he helped build from his home basement three decades ago into a $37.5 billion company, is now undergoing a reckoning.
Although many of the claims against Mr White related to his personal life, the lines between what’s private and public at some point started to blur and the matter is now being investigated by Australia’s corporate regulator.
Richard White sitting in a boardroom in Sydney in 2018. He stepped down from the WiseTech board and as CEO on Thursday. (AAP: Brendan Esposito)
Investors have also reacted. The company’s share price took a battering this week.
WiseTech shares had traded as high as $139.02 before plummeting to $99.37 on Thursday – the first time it had fallen below $100 since early August.
But on Friday morning, WiseTech shares rebounded 20 per cent to $121.33. By Friday’s close the stock lost some of the gains, but still ended the day 12.7 per cent higher at $112.
WiseTech’s board was told about ‘inappropriate behaviour’ involving White in 2019
WiseTech’s board initially framed the allegations against Mr White as a personal matter.
But concerns about his behaviour were brought to the board’s attention more than four years ago by one of its then directors.
In October 2019, then WiseTech director Christine Holman resigned from the board, highlighting concerns about significant problems within the company, including the conduct of Mr White as its chief executive, but she was told to have “founder empathy and accept that is how geniuses are”.
Christine Holman resigned from WiseTech’s board in 2019. (Supplied)
Ms Holman, a former Telstra executive who now sits on several boards including AGL Energy, joined WiseTech’s board in December 2018, and was chairwoman of the audit and risk management committee.
Nine newspapers this week published excerpts of Ms Holman’s resignation memo to the board – where she accused Mr White of “sustained intimidation and bullying” including “aggressive emails, one-on-one meetings and public berating in both audit and risk committee meetings and board meetings”.
“This behaviour of the CEO has been witnessed by many, including the other directors,” she said in the letter published by Nine.
“Despite bringing this unacceptable behaviour to the attention of the chairman and other directors on numerous occasions, this behaviour has not been addressed and instead I have been told to have ‘founder empathy and accept that is how geniuses are.'”
Directors ‘need to have a degree of scepticism’
As the WiseTech story unfolds, advisers to Australia’s biggest institutional investors are thinking about how they will respond, and that could mean hitting company directors where it hurts: by voting against them and/or their renumeration reports.
Vas Kolesnikoff is the head of Australia & New Zealand Research at ISS. He says they are still considering what to advise their clients.
But he told ABC News it’s no longer a private issue: “This is about what happens in a company. It is about corporate governance,” he said.
“All these issues impact shareholder value.”
Mr Kolesnikoff says having independent directors is crucial.
He notes how Qantas’ board was slammed in an independent review for enabling a culture that gave its former CEO Alan Joyce too much power and thereby reduced employees’ willingness to challenge or speak up on issues affecting the airline.
Mr Joyce departed the company last year following a string of controversies including the illegal sacking of about 1,700 workers and the selling of tickets on already cancelled flights.
Did Alan Joyce have too much power at Qantas? That’s what an indepedent review found. (AAP: Bianca De Marchi)
The board later responded by slashing executive pay bonuses, including cutting Mr Joyce’s final payout by nearly $10 million.
“Directors need to be questioning of management, to have a degree of scepticism,” Mr Kolesnikoff says.
Ed John, from the Australian Council of Superannuation Investors (ACSI), said on Monday the allegations were a “major concern for investors”.
ACSI provides advice for the country’s biggest superannuation funds including AustralianSuper, and told the AFR that it was “critical that the board investigates these issues on behalf of all WiseTech shareholders and responds appropriately”.
WiseTech isn’t the only publicly-listed company facing allegations of bad behaviour
WiseTech is not the only corporate to make media headlines for alleged bad behaviour.
Nine Entertainment’s board was this month forced to apologise to its workers after a review detailed a culture of bullying and sexual harassment and found that the company “lacks accountability”.
The review was conducted after sexual harassment allegations surfaced against former Nine Entertainment news boss Darren Wick. That investigation is still ongoing.
Former Nine Entertainment boss Darren Wick. (Supplied)
But the company-wide review into Nine heard confronting testimonies from workers detailing a toxic culture, including HR cover-ups when complaints were made.
Australia’s corporate watchdog is also currently investigating Mineral Resources managing director Chris Ellison, in the wake of his admissions about an elaborate tax evasion scheme involving companies registered in the British Virgin Islands that ran over a decade.
The Australian Taxation Office (ATO) dealt with the matter but now ASIC is investigating. It has details of the conduct of Mr Ellison and other key executives and is investigating whether the miner breached its duties.
In a statement to the ASX on October 20, just two days before ASIC said it was investigating, the board aimed to frame it as a “private tax matter”, saying “Mr Ellison profoundly regrets his errors of judgment”.
On Friday, Australian Super sold down its stake in Mineral Resources, according to a statement from MinRes on the ASX.
Super Retail Group says it tried to settle scandal but was forced to go to court
Then there’s Super Retail Group, owner of Supercheap Auto, Rebel, BCF and Macpac, which is facing legal action and an ASIC investigation after revelations of a workplace and sex scandal.
News of the scandal broke in April when Super Retail reported to the ASX that it was the subject of expected workplace litigation that could cost it $30 million to $50 million.
Super Retail Group, owner of Supercheap Auto and BCF, is facing legal action. (AAP: Dave Hunt)
The legal action was launched by former chief legal counsel Rebecca Farrell and former co-company secretary Amelia Berczelly, represented by Harmers Lawyers, who claim they were bullied and victimised.
Their allegations also include that Super Retail chief executive Anthony Heraghty was having a secret affair with the former head of human resources, Jane Kelly.
Documents filed as part of the case contain allegations that the company’s now outgoing chairperson Sally Pitkin and another unnamed board member, attempted to interfere with Super Retail’s whistleblower system and suppress staff complaints about the alleged affair between the CEO and head of HR.
Super Retail Group this month won the right to appeal against an earlier decision to lift the suppression order on the payout terms discussed with Ms Farrell and Ms Berczelly.
Addressing questions at the company’s annual general meeting, Ms Pitkin this week revealed that the company tried settle “on reasonable terms” with its two former executives over the scandal, but that they failed to reach a deal.
Ms Pitkin said she was limited in what she could say because the matter was before the courts, but said the allegations raised by the two former employees had been fully investigated by the board and “were not substantiated”.
She said Super Retail is vigorously defending the claims.
No doubt, over the coming weeks and months more will emerge about just how much Super Retail Group’s board know of a relationship between the CEO and the head of HR and how the whistleblower complaints were handled.
