Big investors blast WiseTech Global’s board chaos

Top investors have demanded WiseTech Global restore an independent board after four directors quit in protest against founder Richard White, triggering an $8.2bn share rout.

The board exodus wiped $3bn from the value of Richard White’s WiseTech stake.

One of WiseTech’s top investors has demanded the tech giant restore an independent board after four directors quit in protest over the role of its tycoon founder Richard White with the dramatic power dispute wiping nearly $8.2bn from the company’s value.

Lisa Brock, Michael Malone, Fiona Pak-Poy and the independent chairman Richard Dammery will quit the software giant on Wednesday, citing “intractable differences in the board and differing views” around the ongoing role of its founding CEO.

The latest bombshell landed after Mr White stepped down last October following a string of sensational allegations that he exchanged business advice for sex, with the board launching a review of governance and behavioural standards. That report has now been handed to the board and was due to be delivered at its half-year results on Wednesday.

The $93bn superannuation giant HESTA, one of the tech company’s top shareholders, said it was disappointed the board “has not been successful in its efforts to confront the concerning issues at WiseTech and accelerate necessary succession planning”.

“We look forward to hearing from the company regarding succession planning and restoring an independent board at its half-year results briefing on Wednesday,” HESTA’s head of portfolio management, Jeff Brunton, said. “We believe this is vital to rebuilding investor confidence.”

WiseTech closed down 20.1 per cent per cent at $97.25, wiping $8.2bn from its market value.

The fortune of Mr White, the company’s largest shareholder with a 36.7 per cent stake, was slashed by $3bn.

WiseTech said a former veteran director, Mike Gregg, would rejoin the board.

In December, Mr White promised investors he would not “override” management in his new advisory role that pays the same $1m annual salary he has received since 2014.

But several investors believe the board fiasco on Monday proved otherwise.

“It was just that battle between a very strong and influential founder versus a non-executive board and we’ve seen the consequences of ‘back the founder’,” said Matthew Haupt, who manages Wilson Asset Management’s portfolio with shares in WiseTech.

“Obviously, the non-executive directors couldn’t stomach it and have all bailed ship and didn’t really back the decision not to do anything more punitive,” he said.

Finding replacement directors would prove difficult, Mr Haupt told The Australian.

“You’d want fairly malleable people, I’d say, given that the precedent is that their views will get overruled,” he said. “They’ll find it hard to attract any good talent or strong non-executive directors, that’s for sure.”

Morningstar analyst Roy Van Keulen said while he didn’t see the board resignations as a material loss, it signalled a “shift in power toward the founder”.

Mr White now faces a major battle to regain investor confidence and handle regulatory scrutiny in his new role as Founder and Founding Chief Executive. WiseTech said last week that Mr White was yet to sign the contract for his new consulting role.

The Australian Securities & Investments Commission confirmed it was keeping a close watch over the logistics giant while the ASX’s compliance department had already questioned WiseTech’s handling of media queries and whether it was giving investors enough information before it made major changes within the company. The company also faces a potential class action with Banton Group managing director Amanda Banton on Monday confirming the firm was investigating WiseTech’s share price drops, ­including the 23 per cent plunge on Monday, and in October last year when shares dived more than 20 per cent following allegations about Mr White’s personal life.

Another class action firm – Phi Finney McDonald – launched a class action against WiseTech Global late last year, alleging the company breached its continuous disclosure obligations and/or engaged in misleading or deceptive conduct by providing its FY20 guidance on August 19, 2019, and reaffirming that guidance in October and November 2019, without reasonable grounds.

“The class action alleges that investors who acquired WiseTech shares during the claim period are entitled to compensation for loss and damage as they paid more for those shares than they ought to have paid as a consequence of WiseTech’s conduct,” a statement on the firm’s website said.

“The class action also alleges that some group members would not have purchased WiseTech shares if WiseTech had complied with its obligations.”

A spokeswoman for the WiseTech board would not confirm if a company review being conducted by Seyfarth Shaw and Herbert Smith Freehills would be made public when it is completed.

“Further updates on the board and related matters will be made in due course,“ she said.

WiseTech also updated its guidance, with revenue now likely to be at the bottom end of a $1.2bn to $1.3bn range for the full year, due to further delays to the rollout of the three announced “breakthrough” products.

WiseTech major shareholder Richard White.

Underlying earnings are forecast to be around $600m-$660m, but the earnings margin rate is expected to be towards the top of the previously announced range of 50 per cent to 51 per cent, driven by stronger results from a company-wide efficiency program.

E&P analyst Paul Mason said the board restructure would play heavily on investor minds and he believed it indicated that “some board members were wanting to shrink Richard’s role further than he was wanting to”.

“In terms of management and board, we believe there were great concerns in the market about whether Richard White was being pushed out under pressure from the media and maybe the board, with some investors having relayed to us their concerns that maybe someone on the board was leaking information to the media,” he said.

“The initial reaction from speaking to people last week after the trading halt went into effect was a panic as to whether Richard was actually going to resign due to board pressure.”

WiseTech had called for a trading halt last week, pending an update on a governance review involving Mr White.

That halt was lifted on Monday, more than two weeks after the company said it had received two more complaints from an employee and a supplier about Mr White’s behaviour.

WiseTech said last week that the key terms of the 10-year consulting arrangement – either via a consultancy agreement with Mr White’s company, or by amending the terms of his pre-existing employment contract – “are still in the course of being agreed”.

Chief financial officer Andrew Cartledge is acting CEO while executive recruiter Russell Reynolds ploughs ahead with finding a replacement.

RBC Capital Markets Garry Sherriff took a “negative” view that Mr White was yet to sign his new contract but said this month that WiseTech’s “medium-term structural tailwinds remain solid” and would benefit from US tariffs.

“WiseTech has no permanent CEO in seat at present, with ex-CFO Andrew Cartledge acting as interim CEO, contributing to the uncertainty. Medium term, WiseTech should be a net beneficiary of tariffs which are likely to spur demand for CargoWise, particularly customs and compliance modules,” Mr Sherriff wrote in a note to investors.

WiseTech expects to deliver revenue of $1.2bn to $1.3bn in fiscal 2025, representing revenue growth of 15 to 25 per cent versus fiscal 2024. This compares with the company’s previous guidance of $1.3bn to $1.35bn.

WiseTech has engaged law firms Herbert Smith Freehills and Seyfarth Shaw to complete a review of the company, following the allegations involving Mr White.

Billionaire Richard White’s former mistress Linda Rogan. Picture: Richard Dobson

“The board review has progressed, and WiseTech’s board remains committed to ensuring it takes the appropriate time necessary to conclude it,” the spokeswoman said on Friday.

The law firms have examined allegations, including that Mr White failed to disclose a number of “close personal relationships” in the workplace with the board; had misused WiseTech funds to have plastic surgery in 2019 and host former lover Linda Rogan in New York; and engaged in bullying, harassment and intimidation – an accusation raised by former director Christine Holman.

Last November Mr Dammery, the chair, said the review had so far found “no evidence” of misconduct and the external lawyers had attributed Mr White’s behaviour to “creative abrasion”.

Not long afterwards, WiseTech co-founder and director Maree Isaacs sold her stake of 10.2 million shares to Mr White.

Mr White, who is worth about $15bn, tried to bankrupt Ms Rogan after she alleged he offered her business advice and a $13m mansion in Sydney’s Vaucluse in exchange for sex.

Ms Rogan purchased $90,000 worth of luxury furniture for the property, but claimed it was useless after she was locked out of the mansion when Mr White’s now wife Zena Nasser discovered the pair’s affair.

Ms Rogan successfully applied for garnishee orders to get the $90,000 from Mr White’s bank account, but he filed bankruptcy proceedings against her to get the money back.

Mr White and Ms Rogan settled their federal court dispute last month, but the legal fight sparked other allegations.

Another woman, psychologist Jenna Riches, told The Australian Mr White had also allegedly offered her business advice in exchange for sex. The Australian also revealed Mr White purchased a property in Lane Cove in 2018 for businesswoman Marcia Kensell, before their sexual relationship also fell through.

Additional reporting: Angelica Snowden

Originally published as Big investors blast WiseTech Global’s board chaos