Avigilon CEO: At What Point Do You Take the Blame And Resign Yourself?
The shots at Avigilon continue.
After ousting their COO, Avigilon's CEO went on a Canadian financial TV network to defend his decision and the company
The very first question: "At What Point Do You Take the Blame And Resign Yourself?"
In this note, we examine this question and what this means for the company's future.
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They should bring back Dave Tynan who was the origional V.P. of Sales and built the foundation at Avigilon before the Schmode coupe. Tynan is a class act that could help calm the waters if Fernandez is willing to admit he needs help. The first step to recovery is admitting you need help...right Alex?
While I agree inprincipal with this, it reminds me of the adage: fool me once shame on you, fool me twice shame on me! I've met Dave and I hope he is smarter than that even if someone like him is exactly what they need!!!
Wow, the interviewer is taunting Avigilon on Twitter:
The interview with #Avigilon that's likely got me off their Christmas card list. http://t.co/zbF2ZPoipM $AVO.ca pic.twitter.com/aFSlApmbeB
— Michael Hainsworth (@hainsworthtv) September 2, 2015
2:30 in the interview is my favorite:
BNN: You're the CEO, you're the Chairman of the Board, you're also the Founder, could you even be fired if the Board wanted to?
A.F. Well of course; the CEO always reports to the Board. But what you neglected to mention is that I am also the largest share holder by far, bigger than any of the institutional investors out there...
Unfortunately, the question wasn't then reformulated as:
You are now the defacto COO and you're already the CEO, you're the President, you're the Chairman of the Board, you're also the Founder, as well as the biggest Shareholder by far.
Could you even be fired by the Board?
Now that would be a surreal Board meeting for sure!
He wasn't throwing softballs, and Fernandes definitely looked like he wished he'd brought a full set of catchers gear.
Alex gives a hand to former 'valued contributors', during a countdown of the remaining Avigilon executives.
That video of them counting down to Alex's 'new and improved' reign of absolute dictatorship needs a "creepy" button added to the options underneath it. He's absolutely soaking it up, yet looking at their faces I get more an impression that they're all smiling and clapping because they still have their jobs after the carnage of late.
That would explain why it creeped me out. That was the countdown to going IPO probably. That would explain why there were all so happy.
Sorry 5. Didn't mean to mislead you.
What I should have said was "how many of these executives are still at Avigilon?"
*excluding board members...
A year has passed and not only have things not improved, they have gotten worse.
The stock price is down another ~20%:
After rallying earlier in the year, further deceleration of revenue growth and now gross margin declines and net losses have driven the stock down further.
Worse, there is no obvious saving grace - analytics have remained a minor factor, both in terms of patent licensing and new product uptake, while Hikvision drives down unit pricing for everyone.
The main defense against Avigilon's CEO being fired / resigning is his control of the board, making such a move unlikely. But unless the end game is selling Avigilon off (which we think makes sense and would garner a significant premium), Avigilon's corporate and stock future is challenging.
Alex Fernandes has lost a lot of investors' money over the past few years, buying an old building (what is the status of that?), paying millions in severance ("consulting fees"), and paying himself and his directors outrageous sums of money. He should be ashamed of himself. How has he delivered value to the majority of Avigilon's shareholders or employees with options/shares?
At what point will the Board step up to their fiduciary responsibilities to shareholders and the company and find a new CEO or take some other corrective action. Or should action be taken against them?
As per many definitions and from www.investorpedia.com: "A board of directors has a fiduciary duty to the company and its shareholders. The board is tasked with overseeing the business' operations and ensuring it generates adequate returns for investors."
Are the majority of investors seeing adequate returns from AVO?? Not likely.
Read more: What are the fiduciary responsibilities of board members? | Investopedia http://www.investopedia.com/articles/investing/111915/what-are-fiduciary-responsibilities-board-members.asp#ixzz4LNsdvTM9
They could depose A.F., but it would be pitched battle for sure, considering Alex and Wan's holdings:
Notice on the list how small the institutional investors are. Related, analysts say that the stock is now primarily in the hands of smaller retail investors (think stockhouse fanbois). Given their very fractured holdings, they do not have the power to force any change.
On the other hand, the price is so low, it is conceivable that an institutional investor tries to buy up a big stake to force Avigilon to make changes / sell off.
As many may know the company was built to be sold...( this came directly from AF himself in the start up days- any higher level employee hired in the first couple years can tell you the same)...possibly he got greedy and missed his window for maximum profits???
possibly he got greedy and missed his window for maximum profits???
Agreed, he missed the window for maximum profits (stock at 9 now vs peak of 34). At this point, it is an issue of how much he can salvage. Strikes me that 15 or 20 is optimistic for a sell off.
Does anyone working at Avigilon own any significant amount of shares? Take a look at these C-Suiters:
Ric Leong CFO < $60k
Mahesh Saptharishi CTO < $40k
Joel Schuster CLO < $50k
Alex Fernandes CEO < $35,000,000
What's up with that?
Source: 4-traders.com