Gearing up for the clash of the titans
A week is a long time in politics goes the famous quote attributed to former British prime minister Harold Wilson.
The past eight days must have felt like something close to eternity in the boardroom at Independent News & Media.
First, we had the apparently carefully choreographed departure of Gavin O’Reilly from his post as CEO, ending his personal association of almost 20 years and signalling the end of the O’Reilly 40-year era at Ireland’s largest newspaper group.
To outsiders, it appeared to be quite a coup for the chairman of INM, James Osborne, one of Ireland’s best known legal eagles.
Gavin O’Reilly has worked hard for the company, but was clearly associated with the ultimately disastrous strategy of leveraging the business to the hilt which his father, Tony pursued for so long.
The company’s largest shareholder, Denis O’Brien, wanted Gavin out, having shipped losses approaching €500m on his investment.
The arrival of Dermot Desmond on the shareholder register gave further impetus to the anti-O’Reilly forces.
Last Autumn, James Osborne assumed the chairmanship in succession to Dr Brian Hillery, a UCD academic and former Fianna Fáil senator.
Now in his mid-70s, Hillery, a nephew of late president Paddy Hillery, must have grown weary of the battles between the O’Brien and O’Reilly camps, culminating in the enforced departure of key O’Brien ally, Leslie Buckley as director last June.
Osborne’s appointment was not welcomed by O’Brien, leading people to assume the new chairman would act in the interests of the status quo.
Those who know Osborne describe him as the ultimate pragmatist and it seems, to paraphrase one key investor, he certainly “looked under the bonnet” of the company before reaching the conclusion that the departure of Gavin would be in the best interests of all concerned.
However, wheels have to be greased, particularly wheels used to transport CEOs out of HQs for the last time. In the case of Gavin, the severance package was fixed at €1.87m, or 23 months’ pay.
The rational was that this was a modest price to pay to secure stability and avoid a lengthy high court confrontation that would soak up as much, if not more in legal costs, precious management resources and acres of bad publicity.
It is believed Baroness Jay, a director, pushed hard for the deal to be agreed. Jay was one of a number of international figures put on the INM board by Tony O’Reilly.
If Osborne, Jay et al, thought they had finally secured stability, having unveiled the generally well-regarded Vincent Crowley as Gavin’s successor, they had another thing coming.
The first signs of trouble came when it emerged that aspects of the company press release announcing the new appointment were contested, with two of the directors, Paul Connolly and Lucy Gaffney making it clear they had not endorsed the O’Reilly exit package.
Connolly went further, this week, launching legal proceedings arguing that the company breached section 86 of the Companies Act without putting the matter to a general meeting of shareholders for approval.
INM’s position is it took independent legal advice before agreeing the deal.
The matter comes before the High Court on Monday where a date for an early hearing will probably be set. Suffice to say that defeat for the board in the courts would be highly embarrassing for the chairman.
The O’Brien camp is also arguing that the payment of almost €2m to O’Reilly is unthinkable, given the collapse in the share price, the scale of the likely job losses and the swinging cut in employee pensions now coming down the tracks.
Osborne’s reaction to the Connolly move has been swift, however. It has been made clear the board will not be supporting Connolly’s re-election to the board.
The AGM on June 8 looks set to be a gunfight at the OK corral, with Osborne needing to win over a majority of the institutional investors to counter an O’Brien block of votes which, when combined with those of Desmond, will approach 30%, outweighing the 14% or so held by the O’Reillys.
It appears, however, the new CEO, Vincent Crowley, has the backing of the O’Brien camp, although this backing is conditional on Crowley launching a cost-shedding exercise of a scale never experienced before at the group.
The O’Brien camp is also pressing management to come up with a strategy for the digital revolution, with O’ Brien’s supporters pointing to his supposedly superior skills in this area.
Osborne has the sort of track record as a lawyer and company chairman and director that is likely to impress the institutions.
Appointed managing partner of law firm A &L Goodbody, in 1982, at just 32, having established the firm’s New York office, Osborne soon transformed the image of what had been a relatively stuffy outfit.
He ‘retired’ as managing partner at 45, but emerged as a company director with skills as a problem solver, as a sort of James Bond of the boardroom.
Arguably, his greatest achievement was in masterminding much of the flotation of Ryanair.
He certainly fits the mould as the modern hands on chairman with extensive commercial experience.
It is said he can charm people to the point where they are putty in his hands, but can also be ruthless.
At Ryanair, he will have been exposed to the corporate world at its most bracing. In other words, he will be no wilting lily as he faces up to the forces of O’Brien and Desmond, well aware that such internal battles are a distraction as the company faces into a decisive period of restructuring and refinancing.
* Born: 1949. Devon.
* Education: Campbell College.
* Trinity College Dublin — Law degree.
* Incorporated Law society. Qualified as a solicitor.
* Career: Joined A&L Goodbody, 1973.
* 1979: Made a partner at the firm. Moves to New York to set up new office.
* 1982-1994: Managing partner, A&L Goodbody.
* Oct 2011: Appointed as chairman of Independent News & Media.
* Directorships: Ryanair, Easons (chairman), INM.
* Consultant: A&L Goodbody.
* Residence: Ranelagh, Dublin.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
