Chip Goodyear rejects CEO appointment and resigns; Ho Ching to remain head
Former BHP Biliton CEO Chip Goodyear has rejected his upcoming appointment of CEO of Temasek Holdings. He was supposed to take over Ho Ching on 1st Oct 2009. Ho Ching will now remain CEO. In addition, Goodyear will be stepping down from Temasek’s board on 15th August. Temasek’s press release says that his resignation is due to irrecouncilable strategic differences:
Four months into the leadership transition, the Temasek Board and Mr Goodyear have concluded and accepted that there are differences regarding certain strategic issues that could not be resolved. In light of the differences, both parties decided that it is in their mutual interests to terminate the leadership transition process and hence the executive relationship with effect from 15 August 2009. Mr Goodyear will also step down from the Temasek Board effective the same date.
The Financial Times notes there has always been the question of how much freedom Goodyear would really have had in pursuing his preferred investment strategies:
But there has been considerable speculation in Singapore about how much independence Mr Goodyear would be given in pursuing his goals in light of the fact that Temasek owns most of the city-state’s leading companies.
It’s hard to tell what exactly drove Goodyear to resign, but the WSJ quoted the following from an unnamed source:
As CEO-designate, Mr. Goodyear pushed to instill a tighter sense of discipline within the company, say people at Temasek. People who didn’t show up on time for internal meetings were fined for each minute they were late, they say. Typing messages on BlackBerrys during meetings was prohibited.
Already, some of Mr. Goodyear’s initiatives to bring about change had met with a poor reception. His proposals for the firm’s new strategic direction were considered too risky by some, a person familiar with the situation said.
In addition, this person said Mr. Goodyear planned changes in senior management that weren’t well received by Temasek’s board.
Hmm, could Goodyear’s investment strategies really be more risky than Temasek’s ill-thought purchases of Merill Lynch and Barclays last year before dumping both in a fire sale resulting in estimated combined losses of over S$5 bn?
I wouldn’t be surprised if Goodyear felt that all that Temasek wanted to do was put a new friendlier face on its state-owned image without ceding him any real power to effect genuine changes as he saw fit.
And as for what kind of appointment changes Goodyear proposed which didn’t go down well, I guess that says a lot about how serious they ever took Goodyear in the first place. As I said elsewhere before, don’t expect drastic change in Singapore. More of the same is the norm.
Update: NYT is finally reporting on this. Here’s some juicy quotes:
“This is not good news for Temasek,” said Carl Linaburg, co-founder of the Sovereign Wealth Fund Institute in Roseville, Calif., which tracks data on the investment funds. “Prior to Chip’s arrival, Ho Ching had been widely criticized for Temasek’s major losses in financials. Chip’s departure makes people wonder why Temasek can’t seem to make firm decisions with sound judgment, which is essential for managing the assets of a country.”
S. Dhanabalan, Temasek’s chairman, hinted in a statement on Tuesday that the reason for the split might lie beyond the differences on strategy. “The differences in and of themselves are not the issue, but they have helped both the board and Chip to assess that it is in our mutual interest not to continue with the planned leadership transition,” he said.
Update 2: The WSJ has updated their article, in turn so have I updated the quoted passage from their article. So it seems that Goodyear couldn’t tolerate sloppiness on Temasek’s board? And they reacted by restricting his independence and blocking his appointments? Ok I’m probably over-playing this snippet.
The Straits Times is reporting this as well, quoting the WSJ. Isn’t it odd that despite the fact that Temasek is a local company, the Straits Times couldn’t even get its investigative journalists to prise out this fact first hand whilst the Dow Jones could? What does this tell you about the state of journalism in Singapore?
Apart from the above, there’s also this from the Straits Times which quotes analysts as saying:
Mr Goodyear was widely expected to trim Temasek’s financial holdings and move aggressively into commodities and energy and into emerging market infrastructure and consumer retail sectors, analysts and investment bankers said. They cited his appointment as a clear move that Temasek was angling for more resources deals.
In other words, he tried to bring about too much change and was stymied.