Roadside recovery services company AA plc (LON:AA.) has fired executive chairman Bob Mackenzie with immediate effect for “gross misconduct”.
Shares plunged 17.31% to 20.160p on the announcement.
Mackenzie was appointed executive chairman in 2014 after overseeing a management buy-in of the firm, which led to its initial public offering on the London Stock Exchange.
The buy-in was backed by institutional investors including star fund manager Neil Woodford, Legal & General and Aviva.
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"Bob Mackenzie has been removed by the board from his role as executive chairman, from his other roles and as a director and as an employee of the company, for gross misconduct, with immediate effect.”
The motoring company gave no further details behind the ousting of Mackenzie, leading to speculation among analysts.
Unlikely to be fraud related, says Liberum
“We do not believe that it is fraud related,” Liberum said. “In the annual report, the board had already begun the process of splitting the combined roles of executive chairman.
It revealed its decision to fire him alongside a first half trading statement, which revealed business customers in 2017 have continued to "decline marginally" to 9.9 million from 10.1 million a year ago. Paid members, however, have risen to 3.4 million from 3.3 million, despite new transparency disclosure and the 2% increase in insurance premium tax implemented in June.
AA said the first half was hurt by of “erratic work load patterns on an inherently fixed cost base”. Results were also affected by a one-off cost relating to a profit sharing arrangement with a third party for certain products they underwrite, such as breakdown repair cover.
The recognition of revenue for insurance policies underwritten will also be delayed. Its accounting practices mean this revenue is deferred over the life of the policy, which will hit profits.
AA expects 2017 to be in line with last year
"We now expect the full year performance to be broadly in line with that of the last financial year," AA said.
"We remain confident in the resilience and long-term prospects of the AA".
Breakwell "will be in a position to provide an update on our plans" when the first half results are formerly published on 26 September.