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Row erupts at Vocation

Australian Financial Review     |      3 November 2014

Vocation shareholder calls for CEO to quit

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VocationThe board of embattled education and training provider Vocation has expressed full confidence in managing director and CEO Mark Hutchinson after the company’s largest shareholder and one of its founders dramatically demanded he be sacked in the wake of a 60% crash in its share price, following compliance failures leading to it paying back $19.6 million in Victorian government funding.

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In an interview with ­Channel Nine’s Financial Review ­Sunday, Vocation founder and former executive Brett Whitford called for Hutchinson’s removal as part of an Brett Whitfordaggressive management shake-up and threatened to call an extraordinary ­general meeting (EGM) if the board did not act swiftly.

Whitford built up the Customer Service Institute of Australia, one of the three training and education ­businesses which were folded in together to form Vocation, which listed on the stock exchange in late 2013.

He said he raised alarm bells with the Vocation board about practices at one of the other two businesses, the BAWM business in Victoria, in the months leading up to his forced ­departure. But he said the board did not act on his concerns.

.I’m disappointed the board didn’t listen to the issues I raised, but I’m a realist,” he said. “I raised a number of issues. One of them was the competency of BAWM management.

Whitford, who holds 8.9%  of the company, was forced out in June this year by Hutchinson and the board and claims he was gagged from talking to institutional investors in the lead-up to his departure. Whitford said he’s “prepared to take whatever action is needed to save this company and if that means calling an EGM then so be it.”

But in a statement released to the sharemarket on 3 November, ­Vocation’s board of directors declared Hutchinson is the best person to lead the company and the ongoing restructuring of its troubled Victorian business. The company’s board of directors also rejected suggestions by Whitford that he should be appointed a director.

While the board acknowledges the right of all shareholders to express views about the company’s direction, particularly following a period of share price upheaval, the board is confident the managing director is well-placed to take the company forward..

While Mr Whitford remains a shareholder, he was dismissed from the company for breach of contract ­earlier this year and plays no part in the company’s board or management.

The company does not accept Mr Whitford’s characterisation of the circumstances of his departure from the company, as outlined in the ­interview with Financial Review ­Sun­day, and given these circumstances and interactions over the months since his departure, remains unanimously of the view that it would not support Mr Whitford as a director of Vocation.”\Vocation’s board, led by former ­federal treasurer and education ­minister John Dawkins, has consistently backed Hutchinson.

Mark Hutchinson2Dawkins and fellow director Steve Tucker both topped up their ­holdings in the company with ­on-market purchases on October 31 and October 30 respectively.

The ­federal government’s Future Fund also became a substantial ­shareholder late last week with extra share buying.

Vocation shares crashed last week by more than 60%. The stock listed at $1.89 in 2013 and reached $3.35 in August this year. It fell to a low of 77.5¢.

On wider industry issues, ­Whitford said he still passionately believed in the ability of the private ­sector to do a better job of delivering training to industry than a TAFE system, which he described as having an approach where students are ­“sheep-dipped from 9 to 5” without much vitality and responsiveness and with a heavily unionised workforce.

He proposed that, in comparison to private ­businesses which were capable of ­delivering on-site training at 10pm at night in response to demand, “TAFE can’t compete”.

See
Financial Review Sunday
Vocation statement
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