James Hardie’s ‘bully boss’ prepares for legal battle after sacking

The exit of Jack Truong shows boards are now becoming acutely aware that demands on their CEOs are rapidly evolving.

James Hardie was quick to give the impression that it is business as usual through the flurry of top executive appointments at the building materials major, but a bigger fight is brewing in the background.

Just days after being fired amid claims of “intimidating” behaviour, former chief executive Jack Truong has hit back.

Truong, whose mantra was “continuous improvement”, now looks ready for a legal battle which he calculates will result in a settlement rather than seeing the board and chairman dragged through an open court hearing.

At stake for Truong, a former long-time 3M executive and North American boss of Swedish multinational Electrolux, is his reputation as well as a payout that could run into the tens of millions of dollars.

While not illegal or discriminatory, Truong’s behaviour was “not respectful to the individual” and remained inconsistent with James Hardie’s code of conduct, the company said last week.

But Truong says he “unequivocally” rejected Hardie’s executive chairman Mike Hammes assertions made on Friday that he created a hostile work environment.

“I was blindsided by the termination and unequivocally reject the assertions made by Mr Hammes and the company,” Truong says, noting that sales and profits increased sharply during his short tenure.

James Hardie is directly targeting the home renovation market..

Adding to pressure on the board was the immediate exit of the four-decade 3M veteran Moe Nozari who quit as non-executive director. Critically Nozari was a member of Hardie’s board nominating and governance committee which oversees the evaluation of other board members, the chair and the company’s top management team including the CEO.

Nozari, who was appointed by Hammes, had only joined James Hardie a little over two years ago just after Truong was named in the top job.

There is little suggestion of the problems brewing in the recently issued James Hardie annual report where Truong’s total remuneration package rocketed to $US19.7m ($27.4m), up from $US6.06m previously.

He got a substantial increase in short and long-term bonus payments and it will be the $US10m in long term payments subject to the legal action, which are also covered by a clawback provision.

There were few signs of problems brewing in James Hardie’s annual report. Picture: Bloomberg News

Just for good measure James Hardie’s board signed off of an 11 per cent increase in Truong’s base salary for the coming year and also upped his potential long-term bonus target.

Earlier on Monday Hammes named three critical roles. The appointments follow comments by him last week that several unnamed executives advised the board that they intended to resign or were actively considering resigning.

Truong no doubt had a role – albeit short – in the development of each executive, but his exit paved the way for the appointments.

Hammes elevated Australian boss John Arneil as the head of Asia Pacific operations, while supply chain specialist Ryan Kilcullen was named as senior vice president of global operations.

Bench strength

The moves were designed to show the company has bench strength while it undertakes a global search for a new chief executive under interim replacement, Harold Wiens.

Kilcullen steps into the role after spending the last five years overseeing Hardie’s manufacturing operations and supply chain issues. Under the tenure of Truong he was in charge of executing the former CEO’s coveted lean manufacturing program which put him in the firing line if things weren’t going to plan.

Kilcullen takes on the global manufacturing role that was essentially held by Truong before he was elevated to CEO in 2019.

Other roles named on Monday include another former 3M executive Joe Liu as Hardie’s chief technology officer. Liu, who has also previously held top R&D roles in 3M, has been working alongside Truong for the last two months learning the ropes of the building materials business.

For Hardie there’s a question over the strategy unvieled by Truong mid last year which commits to a 3M-inherited lean manufacturing model and direct marketing push to homeowners looking to renovate.

Truong’s exit shows boards are now becoming acutely aware that demands on their CEOs are rapidly evolving and directors have to be more responsive about both internal and external concerns about behaviour and expectations of behaviour.

This will force many time-poor executives, particularly those working up the ranks from the shop floor, to re-evaluate how they are perceived internally.

It follows a string of high-profile allegations around bullying or poor CEO conduct in recent years. These include former Cleanaway boss Vik Bansal, former Orica chief Ian Smith and former QBE chief Pat Regan, who was dismissed in relation to breaches linked to “workplace communications”.

There is zero room for disrespect or bullying in the workplace. But high-performing CEOs can’t afford to shy away from pushing or demanding the most from their top executives.

Any leaders should quickly realise that if they don’t have the respect, trust or shared vision among their senior team, investor value will soon implode.