Orica’s chief executive Ian Smith said he is extremely disappointed that his sometimes aggressive and confrontational management style has led to his sudden departure from the explosives giant.
Orica, the world’s biggest supplier of mining explosives, on Wednesday said that Mr Smith will step down and a global search for a new CEO is underway.
But after he returned from a holiday over Christmas, an aggressive outburst from Mr Smith towards his now departed general manager of investor relations Karen McRae, sparked discussions with the board about transitioning to new leadership.
“I’m extremely disappointed. I was changing and there was an incident that coloured where we were going [as an organisation]. Sometimes I go beyond being robust and become aggressive,” Mr Smith said.
Mr Smith said his turnaround strategy, which involved organisational restructuring, heavy cost-cutting and redundancies, had taken its toll on him.
“My wife told me it [the job] was having an effect on me. The emotional and physical toll was too much. There is no excuse for it [the outburst]. It should not have happened and I’ve apologised to the person a number of times,” he said.
Orica shares fell 5.3 per cent to $18.20 on Wednesday, giving the group a market value of $6 billion.
Chairman Russell Caplan said he has a close relationship with Mr Smith and the decision to bring in a new CEO in this way is disappointing for both of them.
“The board and Ian have agreed that this is the best outcome for the company,” Mr Caplan said.
“It has been in the public domain for some time that the board has been working with Ian on his management style.
“He has a direct style and can on occasion be overly aggressive. If you are the recipient of that you have every right to think you are being bullied. I personally don’t characterise it as that [bullying].”
Mr Caplan said the rapid turnaround of Orica had been stressful for a lot of the company’s executives.
He lauded the strategy Mr Smith has been implementing and said there will be no change to Orica’s strategic direction.
“As a result of Ian’s stewardship the company has been transformed. It is stronger, more resilient, and more sustainable across the resources cycle, which is what we set out to do,” he said.
“We have full confidence in the strategy.”
Mr Caplan said that he has been meeting with Mr Smith regularly and had been getting feedback from the executive team on his management style.
Prior to the incident in January, he said Mr Smith had been improving and he was not “at all defensive [about changing] and we were encouraged by his response.”
Orica has hired an executive search firm and is looking globally and internally for a replacement. Mr Smith said he is happy to stay on as long as it takes.
“I’m flexible. I want to do the right thing by the company. They have done the right thing by me,” he said,
He rejected the suggestion he has been fired.
“If this was a firing I wouldn’t be having this conversation with you,” he said.
Orica will go ahead with a strategy investor day next week despite Wednesday’s news that he is departing.
Mr Smith laughed when asked if he would be a “lame duck” CEO while the board looked for his replacement.
“I think everyone knows I have a certain style, and perhaps one of the only good things about it is you can be sure I will not be a lame duck CEO,” he said.
Since Mr Smith took on the top job in February 2012, Orica has cut more than 2000 jobs and has restructured its global procurement and back office systems.
The latest round of job cuts and efficiency measures, announced in November, are expected to result in pretax cost savings of $140 million to $170 million in 2015 and savings of up to $80 million in 2016.
Orica has been under pressure as its mining customers, particularly east coast Australian coal, cut back spending in the face of much lower commodity prices.
Last month Orica completed the $750 million sale of its chemicals business to private equity giant Blackstone, completing its transitions to be a pure-play mining services company.
Orica is using some of the proceeds to buyback up to $400 million worth of its shares.
A number of senior staff have left the company during Mr Smith’s tenure. Corporate communications head, Miche Paterson, left Orica just weeks after she replaced Simon Westaway, who departed to BHP Billiton.
The vast majority of the original executive committee that existed when Mr Smith became CEO in 2012 is no longer with Orica.