Avigilon 'Questionable Management' / 'Authoritarian' CEO

Wow. The shots at Avigilon continue to intensify.

Canada's financial TV network usually cheerleads for Canadian companies like Avigilon. But not right now.

In this note, we review the charges made and what they mean to Avigilon.

Charges

'Management by fear and intimidation' charges against Avigilon are fairly common on Glasdoor, but those are anonymous reviews typically from unverified Avigilon employees. And certainly we have heard investors privately discuss concerns about Avigilon's management and authoritarian style with us.

However, this is the first time we have seen a named figure make such serious public charges against Avigilon. On June 3rd's Market Call show, portfolio manager Alex Ruus [link no longer available] from Arrow Capital matter of factly unloaded on Avigilon, with statements including:

• "The problem with the company is the guy who runs the company is a bit crazy"
• "Doesn’t interface with investors well, caused a lot of upset in the stock"
• "A lot of institutional investors are uncomfortable in investing in the stock because of the management there"
• Concluding with concerns about the CEO being 'fairly authoritarian' and having 'questionable management' 

He backtracked slightly when the stunned host asked about the 'crazy' claim, clarifying that "crazy probably not the right term... a little bit unpredictable and doesn’t like to listen to other people too much." The portfolio manager also said he had not meet Avigilon's CEO and that this was gathered from talking to financial analysts whom cover Avigilon.

You can watch the full interview at the 3:30 mark in this video.

Reputation Problem

Whether or not Avigilon's CEO is 'crazy' or 'authoritarian', the problem is minimally one of reptutation.

The stock price speaks for itself, despite much better than industry average growth, the company's stock price has been repeatedly hammered. Avigilon has had to buy backs its own shares to fight back against this.

The ongoing stock crisis has a negative operational impact, including impact on morale, distraction for management, lower value of stock for employees and now having to divert resources to buy their own shares.

More broadly, for a company that has focused so heavily on top line growth, they need to retain key people and bring on top tier talent. Having such a reputation makes this far more challenging, especially if there is any truth to the charges.