For Nine, timing is everything to keep Hugh Marks’ options open

Nine chairman Peter Costello and departing CEO Hugh Marks. Picture: John Feder

Hugh Marks ‘retirement’ from Nine leaves open myriad questions which makes cultural change at the company impossible until a new boss is in the chair.

The simple fact is Marks is leaving for a basic governance flaw of keeping his board informed about his relationship with a direct report.

Forget all the talk about changing expectations – that is nonsense. This was a basic governance breach which failed simple and longstanding rules of conduct.

The terms of Monday’s “retirement notice” smack of a managed solution aimed at maximising his exit pay including the 1,156,226 options, plus an extra 81,521 so egregiously put up for approval at last week’s annual meeting.

The meeting was also not informed.

The words of praise from chair Peter Costello are all part of the attempt to design the narrative in Marks favour but fail the most obvious tests.

Ironically Costello is clearly following the Marks script to ensure he doesn’t jump ship to a rival media company.

Its called protecting your talent no matter what.

The questions left unanswered include just when his relationship with Alexi Baker started.

Was it before her February promotion? And when were Costello and the board informed about the relationship?

The simple rule of thumb about any relationship between a chief executive and a direct report is that it must be declared to the chair and the board. Plainly, this obvious rule was broken.

That explains why the board is split and the management in turmoil.

The timing of the announced departure was extraordinary, after questions were raised at the very same annual meeting which approved the payment of some 1.2 million zero priced options plus a second tranche of 81,521 which have a market value of over $3 million.

If Costello had just learned of the relationship at the very least he should have hit the pause button on the options.

The retirement facade also ensures some pro-rata grant of the options and a full payout of his leave entitlement on the grounds that due notice was given.

Marks says he will depart some time from January which allows some of the dust to settle but more likely it will just fester in a split board and unsettled senior executive group.

Some argue community expectations have changed which is why Marks has joined a growing list of chief executives who have walked for personnel reasons.

Expectations may have changed but the rule which tripped Marks is basic good governance dictating and open dialogue between the chief executive and board.

Without being privy to the full facts it would seem Marks played the game well in every respect but the crucial one of keeping his board informed.