Telstra announced today that it has appointed former IBM executive and current corporate, government and large customer chief, David Thodey, as its new CEO, replacing Sol Trujillo. In the same statement to the ASX, Telstra noted that controversial chairman, Donald McGauchie, will be retiring as Chairman of the telco giant, effective immediately. In a move indicating that Telstra is keen to soothe relations with government and large shareholders, the well regarded Catherine Livingstone will become the new chairman of the company.
Livingstone was previously the CEO of Cochlear, before becoming Chairwoman of the CSIRO and a non-executive director of Macquarie Bank and Worley Parsons. Livingstone was also previously a non-executive of director of Rural Press and Goodman Fielder.
Meanwhile, in Fairfax today, Trujillo took the somewhat unusual step of compiling an editorial on his achievements as CEO, with the Wyoming-born executive claiming:
Telstra has come a long way. Growth rates across a range of products exceed market consensus, as well as our own targets. In addition, we have exceeded the growth rates of our global peers…while continuing to transform, rewire, and unwire the company with fixed and mobile investments, Telstra has improved growth and boosted productivity while improving network quality and employee engagement.
In his essay, Trujillo claimed, “…in my view, the ultimate measure of any company’s success is customers and purchase behaviour.”
Trujillo then noted:
Over the past year, in terms of total shareholder return, we have matched or exceeded the S&P/ASX 200 Index and we have outperformed European and US telco peers by more than 20 per cent.
The departure of McGauchie would surprise few. The former head of the National Farmer’s Federation had angered large shareholders, including the Future Fund (which owns a 17 percent shareholding in Telstra), aggrieved at Telstra’s exclusion from the National Broadband Network tender process and its poor share-price performance.
Future Fund Chairman, David Murray, noted recently that he was “disappointed and concerned” about the loss of shareholder value. Since Telstra’s unceremonious exclusion from the NBN process, its share price has fallen by almost 25 percent, against the backdrop of a burgeoning share market.
McGauchie acknowledged as much today, stating that “Telstra’s strength and ongoing performance are the paramount priority. It is my view that speculation on my tenure was a distraction to business. Nothing should be allowed to get in the way of David and the management team getting on with the important job ahead of them.”
McGauchie’s exit follows the long-term trend of unpopular Chairman and CEOs departing contemporaneously. Last year, Pacific Brands chairman Pat Handley exited less than a year after long-term CEO Paul Moore, Centro chair Brian Healey resigned months after former chief Andrew Scott fell on his sword while MFS Chairman Andrew Peacock hastily departed from his role shortly after CEO Michael King’s resignation.
In another widely expected move, former James Hardie director, Peter Wilcox, has followed Meredith Hellicar’s departure from the Director’s Club and has announced that he will not be seeking re-election at Telstra’s 2009 Annual General Meeting. Wilcox was one of ten former directors of James Hardie who was found to have breached their directors’ duties when they approved a press release which contained misleading statements in relation to the establishment of an asbestos compensation trust in February 2001.