AUSTRALIA
James Hardie Fires CEO Jack Truong, Citing ‘Hostile’ Environment

John J. Edwards III and Peter Vercoe
Thu, January 6, 2022


(Bloomberg) -- Australian building-products maker James Hardie Industries Plc fired Jack Truong as chief executive officer, saying his “threatening and intimidating” behavior had created an “overtly hostile” work environment.

The shares slumped as much as 11% in early Sydney trading Friday after the abrupt departure of Truong, who had been in the job less than three years. Harold Wiens, a non-executive director who has worked at 3M Co., was named interim CEO while a search for a permanent replacement is conducted.

Concerns about Truong’s behavior were raised several months ago by multiple employees, Chairman Mike Hammes said on a conference call. After investigations by an independent consultant, Truong was given the opportunity to address the issues and change his behavior, Hammes said.

“Based upon additional employee concerns raised and further extensive due diligence over these last few months, it was clear that sincere change did not occur,” Hammes said. Truong’s “behavior remained inconsistent with the James Hardie code of conduct.”

Truong’s swift removal shows companies are becoming more responsive to investor concerns about behavior that previously may have been tolerated or ignored, with movements like #MeToo throwing a spotlight on sexual harassment and the focus on ESG forcing boards to uphold corporate governance standards.

Leon Black last year stepped down as chairman and chief executive officer of Apollo Global Management Inc., after more than a year of scandal surrounding his ties with convicted sex offender Jeffrey Epstein. In November, Jes Staley resigned as CEO of Barclays Plc amid a U.K. probe into how he characterized his past ties to Epstein, having previously fended off a prior regulatory probe and a campaign by an activist shareholder to unseat him over his strategy to bolster Barclays’ investment bank.

The cost of standing by a tarnished executive can be harsh, as Australia’s AMP Ltd. found out in 2020. A move to promote Boe Pahari to run the firm’s A$190 billion ($136 billion) asset management unit, three years after he settled a complaint brought by a female colleague, ignited an investor backlash that led to the resignation of the company’s chairman and a precipitous share-price decline.

Resignation Threats

While not illegal or discriminatory, Truong’s behavior was “intimidating, threatening and not respectful to the individual,” according to a survey of 30 to 40 senior management.

Several executives told the board that they intended to resign or were actively considering doing so, Hammes said. Truong couldn’t immediately be reached for comment.

After slumping in early trading, the stock pared losses to 4.1% at 3:30 p.m. in Sydney.

“We have never seen something like this, but appreciate the board’s decisive action,” RBC Capital Markets analysts led by Paul Quinn said in a note. “Investor focus is related to whether the behavior enabled the impressive financial performance. We think leadership struck the right tone and have confidence in their ability to identify the right leader,” they said, adding the share-price decline presents a buying opportunity.

The maker of fiber cement and fiber gypsum building products raised its earnings guidance for fiscal 2022. It now expects adjusted net income of $605 million to $625 million, up from a prior range of $580 million to $600 million. James Hardie reported adjusted net income of $458 million in fiscal 2021.