Liberty Tax Situation Not a Problem, General Counsel Says
Ed Brunot was named CEO at Liberty Tax Service last week, replacing founder John Hewitt.
It may seem awkward if your CEO gets booted by the board of directors but keeps his status as chairman, holds all the Class B shares and so retains the right to name a majority of board members, as happened to founder John Hewitt at Liberty Tax Service last week. But Liberty’s general counsel, Vanessa Szajnoga, doesn’t think so.
“I don’t believe it poses a problem for the company,” she said when I reached her this week. “Just to be clear, when you talk about the Class B shares, what that means is essentially he gets to appoint a majority of the board, but obviously our board is a group of hard-working board members that share the same responsibilities whether they’re appointed by the B shares or the A shares.”
And in this case, she pointed out, a majority of the board voted to terminate Hewitt’s tenure as CEO, so they’re obviously in agreement. Last Friday, September 8, Ed Brunot was named CEO to replace Hewitt. He was chief operating officer, and had earlier joined the company as an “interim step to become the CEO,” she said. “We’re very fortunate and looking forward to having him as the CEO.” She said no negotiations are ongoing with Hewitt regarding his Class B shares, as had been taking place previously.
Right now the board is turning its attention to getting Liberty Tax ready for the tax season. “We’re focused. We have 500 employees at corporate and more than 2,000 franchisees,” she said, adding about the board: “It’s truly a group of pretty dedicated folks whose interest is ensuring that our franchisees have success. They represent the shareholders’ interests” and will continue to make decisions based on that.
On September 11, Yahoo Finance named Liberty’s stock its “Bear of the Day,” when it traded at just over $14. Liberty’s stock price rallied up to more than $16 in February, then sank to $11 in early June. Since then it failed to get over $14.50 for any sustained period, said Yahoo Finance, and recently has been trading near is 50-day average in the high $13s. On Friday it was trading at about $14.20.