Executive exodus coincides with paltry profits

If two themes can be applied to this year's profit season they are marginally better-than-expected earnings, and the departure of some high-profile chief executives.

In most cases, the departure of CEOs coincided with disappointing earnings or massive profit downgrades.

So far, the market has seen the announced departures of BHP Billiton boss Marius Kloppers and Rio Tinto boss Tom Albanese, and today, Sims Metals boss Daniel Dienst announced he would leave when his contract expires on June 30.

In the case of Sims, Dienst's contract wasn't renewed at the same time as the company announced a $296 million loss, cancelled its dividend and revealed last month that it had found accounting fraud in its UK business.

Dienst has been with the company for nine years and it will be interesting to see his payout. Some believe it will be generous given his employment contract was "US-style", which is code for generous.

Other CEOs to depart during profit season include the head of APN Brett Chenoweth, who left after a board and senior management fight with major shareholders Independent News & Media and Allan Gray. In the same week the media group lost $455.8 million for the year to December, including a $151 million impairment charge.

It booked a $485 million impairment charge in August.

In all cases, except BHP, the announced departure of the CEO coincided with big writedowns. Rio Tinto's Albanese departed after the company was forced to make huge write-downs on its global aluminium business and coalmining operations in Mozambique. In anybody's books, the acquisitions of Alcan and Riversdale will go down as two of the worst. Rio bought Alcan for $US38 billion and has written most of it off.

But there is nothing new in CEOs leaving around profit season. When boards sign-off on the financial accounts for the half or full-year it can raise issues about certain aspects of the business, particularly if there are some nasty writedowns.

In the past few months a series of CEOs have resigned or retired, including the boss of MacMahon Holdings, the head of Boart Longyear, QBE's long-standing managing director Frank O'Halloran and Pacific Brands' Sue Morphet.

This story Executive exodus coincides with paltry profits first appeared on The Sydney Morning Herald.