Ashok Vemuri quits as Conduent battles Icahn and earnings slip
US-listed Conduent’s chief executive officer Ashok Vemuri has stepped down, at a time when the company has forecast revenue contraction for 2019 and as its board battles activist investor Carl Icahn for control of the business.
In April, Conduent board member Michael Nevin stepped down from the company and wrote a letter criticising the board’s workings. Nevin was Icahn’s nominee on the company’s board. The business process services firm has also faced several quarters of disappointing results.
“As Conduent enters its next phase and continues the pivot to growth, this is the right time to begin the transition to the next CEO,” Vemuri said in a statement. “I look forward to continuing to work with my colleagues on the Board and the management team during this transition period to ensure the succession process is seamless.”
“The Conduent Board has initiated a search to identify the Company’s next CEO and is considering internal and external candidates as part of the process. The Board has retained an executive search firm to assist with the process,” the Florham, New Jersey-headquartered company said on Wednesday after announcing first-quarter results.
The board, under fire from Icahn, said it expects its CEO search to be concluded in the third-quarter of 2019, until which time Vemuri would continue at the helm.
Conduent has built a large offshore base under Vemuri, employing over 12,000 people in India. In March last year, Conduent said it opened its ninth offshore base in Vishakapatnam to employ over 5,000 people.
In April, Nevin questioned a slew of decisions at the company, including its slowness in hiring a chief operating officer, failing to resolve a decade-long lawsuit with the US State of Texas, and plans to make a $200 million acquisition even as the company’s financial deteriorated. Nevin’s letter particularly took aim at Conduent chairman William Parrett.
“While I do not believe that a board should micromanage a good CEO and management team, I also believe that when a CEO and management team are flailing, it is essential that a strong chairman and board become involved and hold management accountable – which has certainly not been the case at Conduent. The only thing that will save Conduent is a major change in the makeup of the board – beginning with the chairmanship,” Nevin’s four-page April letter read.
In a filing with the US Securities and Exchange Commission, Conduent said that the company had discussed Nevin’s resignation with Icahn before the letter was publicly released.
“Mr. Icahn indicated he could cause Mr. Nevin’s resignation letter not to be delivered to the Board and released publicly if Mr. Parrett agreed to immediately resign as Chairman so that a director designated by Mr. Icahn could replace Mr. Parrett as Chairman,” the company said. “Mr. Icahn also expressed his desire that Mr. Parrett resign from the Board and that a new director chosen by Mr. Icahn be added to the Board. We believe Mr. Nevin’s “noisy resignation” and these related discussions represent an attempt to take control of the Company’s Board.”
Source: ET Tech