RB Global Inc., formerly known as Ritchie Bros. Auctioneers Inc., is appointing a new chief executive officer to replace Ann Fandozzi following a dispute over issues including compensation.
(Bloomberg) — RB Global Inc., formerly known as Ritchie Bros. Auctioneers Inc., is appointing a new chief executive officer to replace Ann Fandozzi following a dispute over issues including compensation.
Jim Kessler, RB Global’s chief operating officer and president, will take over as CEO and join the board of the industrial equipment auctioneer, according to a statement on Wednesday that confirmed an earlier Bloomberg News report.
The company’s shares, after falling as much as 15%, closed 5% lower at $61.51 in New York, giving RB Global a market value of about $11 billion.
RB Global’s Chief Financial Officer Eric Jacobs is also departing and the company will seek a replacement with the help of an external search firm, it said.
The departures of Fandozzi and Jacobs were unrelated to the company’s performance, financial reporting and results of operations, the company said.
Fandozzi had been in discussions with RB Global’s board over pay and incentives for her and the rest of the management team. But the company said these broke off following disagreements over details including the size and timing of equity compensation.
RB Global said that, during extensive negotiations, Fandozzi required its board to approve a front-loaded compensation program in order for her to continue as CEO.
“Ms. Fandozzi was demanding a new incentive pay package that would have brought forward five years of equity grants and resulted in a $65 million upfront equity grant to Ms. Fandozzi – or approximately $145 million, including Ms. Fandozzi and five other executives,” an RB Global spokesperson said in an emailed statement.
The RB Global spokesperson added that the board, with its external compensation consultant, determined the payout exceeded market standards and wasn’t in the best interest of shareholders.
Fandozzi, in response, said,“My focus has been on sustaining momentum while solidifying an all-equity, at-risk incentive program to align management with long-term performance and shareholder value.
She added, “Rather than respond to misrepresentations and speculate on motivations today, I just want to thank the employees, customers and shareholders who placed their trust in me – they are who matters.”
RB Global earlier said Fandozzi informed the board of her decision to resign after an alternative agreement couldn’t be reached.
Fandozzi said in an earlier statement that she hadn’t resigned from the CEO role. The RB Global board made commitments in November before the company’s takeover of IAA Inc., about the management team’s compensation structure, she said.
“It was only in the last few weeks that I was informed that the board was not going to honor those commitments,” Fandozzi said. She said she believed until recently that “negotiations were still being pursued in good faith in the hope that this matter could be brought to an amicable resolution.”
Jacobs, the former CFO, said he didn’t resign and declined to comment further.
RB Global narrowly won shareholder approval this year for its $6 billion acquisition of IAA and invited activist investor Jeffrey Smith of Starboard Value to join its board. After shareholders voiced opposition to the IAA transaction last year, Fandozzi partnered with Starboard to get the deal over the line.
In March, proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. recommended that investors turn down the cash-and-stock transaction. The deal ended up being approved in a close vote.
(Updates with share move starting in third paragraph, adds more detail on compensation in eight paragraph)
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