WiseTech’s board confronts tough choices with its founder and chief, Richard White

The billionaire founder of WiseTech Global, Richard White, has the backing of his board but there are active discussions about the chief executive taking leave from the tech major.

Richard White is the founder and major shareholder of WiseTech Global. Picture: Jonathan Ng

WiseTech’s independent chairman, Richard Dammery, and his board are having a series of tough conversations with Richard White over the string of sensational allegations that have surfaced concerning the private life of the CEO, who is also the tech company’s founder and billionaire shareholder.

One option presented to White during those talks is for the boss to take a leave of absence from the company he has run for more than 30 years to focus on his mental health. Although it hasn’t yet come to that point, White has considered this proposal.

White is alleged to have sought a sexual relationship with Sydney beauty entrepreneur Linda Rogan in exchange for investing in her company.

A second woman has come forward, Sydney-based Jenna Riches, this week, telling The Australian a professional mentoring relationship with White later became intimate. These allegations are not subject to legal proceedings. White has declined to respond.

The initial allegations made in the Federal Court about White’s private life are yet to be tested. However, the notion of a scandal enveloping a powerful shareholder who is also deeply involved in running the company is one of the toughest situations a company board can face.

White is no ordinary CEO, which makes the situation even more complex.

He owns a little more than a third of the company, making him the biggest single investor in the $44bn WiseTech Global.

Linda Rogan and supporters arrive at the Federal Court. Picture: Nikki Short

And as a founder and being deeply involved in WiseTech’s strategy and dealings, he has an outsized presence through every part of the company and has driven much of its success.

As independent chairman, Dammery’s obligation is to represent the interests of all shareholders, while protecting the reputation and integrity of WiseTech.

The events are pushing the boundaries of personal and professional. As is the case with most founder-led companies, White’s and WiseTech’s reputations are inextricably linked. When allegations are made about White’s behaviour in a private cap­acity, it is difficult to split the two.

White still has the backing of his board, which collectively believe that legal process needs to be respected, including a right for the WiseTech CEO to defend himself in court. The feeling around the board table is that directors don’t want to rush to judgment, which could ultimately hurt the longer-term prospects of the company.

However, the board is actively monitoring the situation by holding additional meetings outside the scheduled monthly meetings to stay on top of new developments, including this week’s revelations in The Australian. It is also taking its own external and ­independent legal advice.

White has attended some of these additional meetings, while in some cases he has been asked to sit out.

Dammery, a hardened-former corporate lawyer who has worked with Coles-Myer and Woolworths, is also having a series of direct and ongoing discussions with White.

A spokeswoman representing the WiseTech board told The Australian: “The board notes with disappointment the ongoing media coverage relating to WiseTech CEO Richard White’s alleged private relationships.

“Although the issues are of a highly personal nature, the board is conscious of the potential impact on WiseTech, and has been meeting regularly to consider the situation.

“It will continue to actively assess events and carefully consider the appropriate steps as required.”

“Richard White founded and has led WiseTech to become one of the great Australian corporate success stories, with strong and deep capability across the entire organisation.

“The board is confident in the company’s strategy and focused on the enormous market opportunity and potential ahead of it.

“We acknowledge that the level of media attention has been deeply affecting for Richard and his family, the WiseTech team more generally, and of course for others involved.

“The board is acutely aware of these human impacts.”

Options ahead

As the situation evolves, there’s four paths the WiseTech board can take. For now, it’s option one, which is having White continue as CEO while closely monitoring the situation.

The second option, which has been openly discussed with White, is for the CEO to take a leave of ­absence to focus on his personal health and that of his family. This is expected to be the most likely course.

The third option is to ask White to stand down pending an investigation, although this is difficult because it involves allegations that sit outside the company. The final option, which has not been tabled, is for White to resign.

For shareholders, the allegations have brought forward the uncomfortable question they knew was eventually coming, and that’s around key man risk.

They have to determine how much of WiseTech’s momentum was due to White alone, or whether the tech company can generate its own critical mass without the long-time founder.

As seen from ASX companies from Magellan Funds, Platinum Asset Management to TPG Telecom, the sudden exit of a dominant founder can send it into a tailspin. Even Microsoft took years to recover its momentum following the exit of Bill Gates.

WiseTech, too, is a phenomenally successful Australian technology company and has made the wealth of White. It specialises in software behind logistics, putting it right at the heart of the e-commerce boom. Its shares have more than doubled to $130 over the past year, and are also riding the wave of the tech and AI boom.

As a founder shareholder Richard White’s reputation its deeply linked with his company WiseTech. Picture: Jonathan Ng

Until Wednesday, the allegations had not hurt momentum, ­although the shares fell more than 2 per cent after The Australian published the allegations by Riches on Wednesday.

Dammery is no stranger to big corporate legal complexities and battles. He has advised boards for more than 30 years, including the former Coles-Myer when it faced a takeover approach from private equity major KKR in 2006. He also advised the Woolworths board through the retailer’s disastrous exit from hardware. He also sits on the AussieBroadband board – another founder-led company – and is an Australia Post director.

It has only been this week that WiseTech’s big shareholders have started to reached out to Dammery seeking clarity around the situation. And even then it has been a trickle. It is understood the WiseTech chairman is planning to meet with several big shareholders in coming weeks to discuss the board’s position ahead of WiseTech’s annual meeting on November 22.

The next inflection point remains around how the legal action proceeds. WiseTech has some very big, and very serious names on its register. Asset managers such as AustralianSuper, BlackRock, Aware Super, Norway’s Norges Bank, the Future Fund and Australian Retirement Trust all apply a strong ESG lens when they invest.

If there is wrongdoing on behalf of White, each will be raising the pressure on Dammery to act.

The board also has been monitoring White’s share sales. He sold $61m worth in recent weeks. These sales have been well telegraphed to the board and within the permitted trading window. The timing and size of the share sales match previous large sales over the past few years.

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Originally published as WiseTech’s board confronts tough choices with its founder and chief, Richard White