Another day, another rolled CEO in a merger deal! First it was ASX CEO Tony D’Aloisio, who was sacrificed by his board with an $8 million payout in order to persuade disgruntled SFE Corp shareholders to vote in favour of the merger. Now we’ve got Tattersall’s dumping CEO Duncan Fischer in favour of Unitab CEO Dick McIlwain. But there are some substantial differences in the two situations.
The ASX compromise was announced one month before the shareholder vote, which eventually sailed through with 94.8% of shares voted in favour of the deal. Nothing else was changed.
Compare that with the Tattersall’s compromise, which was announced last night after the merger had been defeated on the proxies. This deal comprised four elements: a new CEO, a new chairman, an increase in the cash offer and the retention of the largest Tattersall’s beneficiary on the board.
Tattersall’s made history last year when it become the first top 100 company to have two directors, Mike Vertigan and Julien Playoust, elected against the wishes of the board. Lo and behold, five months later a merger was announced and those two outsiders weren’t going to be part of the combined Unitab-Tatt’s board.
Playoust’s family owns almost $100 million worth of Tatt’s shares, courtesy of its blood line to Tatt’s founder George Adams. Now Playoust has negotiated himself onto the combined board, replacing Fischer as one of the four Tatt’s representatives.
Fischer was never particularly impressive as a CEO. This was a guy who was happy to milk every last dollar out of problem gamblers to maximise short-term profits, but the voracious nature of the Victorian pokies duopoly has now created substantial political risk and community opposition to a new licence being issued in 2012.
Fischer’s past has never fully explained either. I’ve been told that he was one of the partners at accounting firm Priestley & Morris who worked on the audit of Estate Mortgage, which was given a clean bill of health shortly before it collapsed in 1990. Unit holders won a $31 million settlement payment in 1997 which sent Priestley & Morris out of business, but Fischer headed for Tattersall’s where he climbed all the way to the top – until yesterday.
D’Aloisio’s $8 million farewell payout was quite outrageous – a reward for failure, in fact – and ranks in my top 10 for inappropriate golden parachutes. Tattersall’s needs promptly to disclose exactly how much Fischer is taking with him. Anything more than $3 million would be excessive.