Praemium’s board has described the proposed resolutions, which will be voted on during the next meeting and which are aimed at the removal of the existing directors, as opportunistic, without merit and presenting significant risk to the company’s long-term shareholder interests.
In March, the group of shareholders led by the company’s former chief executive, Michael Ohanessian, whose contract was terminated in February, requested the company to hold the meeting to vote on the removal of the current directors.
The company said in a letter to its shareholders, announced yesterday on the Australian Securities Exchange (ASX), that “as the board understands it, there is no other purpose to the calling of this meeting other than to elect directors who would reinstate the former chief executive officer” and therefore would recommend shareholders to vote against eight resolutions.
According to the current board, the reinstatement of Ohanessian as CEO would likely have significant negative corporate governance implications for the company as it would jeopardise the required independent classification and conduct of the proposed directors.
Also, the existing directors had determined that they could not “properly carry out their directors’ duties” with Ohanessian as CEO.
More specifically, the company’s board said that Ohanessian “acted in way that frustrated the existing directors’ ability to discharge their duty of care and diligence” and he “frustrated attempts by the board to obtain information regarding the affairs of the company”.
The board also stressed that a CEO with different skill set would better serve the company’s needs for the next phase growth. The required skills would include strong client, investor and staff relationship skills along with a broad range of commercial experience and financial capability.
With consideration for the company’s current stage of development, the board decided that Ohanessian “did not have all of the necessary skills for a publicly listed company to drive its next phase of growth and development”.
Additionally, the requisitioning shareholders, apart from the proposed reinstatement of a former CEO, offered no further plan or statement of intention for the future of the company.
“The decision to remove Mr Ohanessian as chief executive officer was not a comment on whether he was the right person for the past, but whether he had the right skill set to lead the company through its next phase of growth and development,” the letter said.
The company’s share price “substantially underperformed” relative to its peers over the past two years and the board said it had acknowledged that while the early years of Ohanessian’s leadership was a time of turning around the business, it stressed that during the past two years Praemium’s focus shifted from survival to growth.
In the meantime, the board has also identified former BankWest CEO, Robert De Luca, as its ideal candidate with “precisely the right background and experience to lead the company in its next phase”.
The general meeting will be held on Friday, 12 May.
