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Contract may have sparked board coup

THE drama surrounding last week’s ousting of Skywest chief executive Bill Meeke and his fellow director Miles Cattle was the culmination of months of infighting in what both sides seem to agree was a dysfunctional board.

Investigations by WA Business News have revealed that a major issue at the heart of the disagreement was the terms and conditions of Mr Meeke’s employment – worth a potential $1 million over four years.

But the differences between the board members were wider than that, as several big shareholders found themselves facing a longer involvement with the company than first planned.

Surprise announcements in the press and increasing differences of opinion over how the business should run created significant acrimony between the business founders and a block of share-holders, led by former director Franklin Tate, his replacement director and business partner Mike Calneggia and their associate, property developer Clive Hartz.

At board level, these issues were played out alongside the difficulties in finalising Mr Meeke’s contract.

With a split board, constant amendments to the minutes and issues that regularly forced chairman Pat Ryan to use his casting vote, it is not surprising that the word dysfunctional has been used by both camps.

This situation was considered unworkable by some and culminated in last week’s move to dismiss the two founders of the business at a general meeting, a vote approved by a narrow margin.

Mr Cattle, the regional representative on the board and the Skywest agent for Esperance, whose family controls about 10 per cent of the airline, described his dumping as a “classic boardroom coup”.

“My feeling is some of the existing directors and [their] friends have a different agenda than I did,” he said.

“Whether that was to sell the company off before the float or to some third party I don’t know.

“Simply put, they could see I was an obstacle to their plans.”

Mr Meeke similarly believes that he was in the way, particularly the terms he believes he had negotiated, which mirrored his previous engagement with Skywest and he claims may have been a barrier to the sale of the business.

“They refused to enforce a break clause that was if the ownership changed I was free to walk and they had to pay me out my four-year contract,” Mr Meeke said.

“I could not be sold with the company and end up working for someone I did not want to.”

The break clause was not the only point, with other significant issues arising from attempts to sign off on the contract.

Mr Meeke denied his current legal battle with National Australia Bank had been an issue at any stage of his directorship.

Mr Ryan, the chairman and acting chief executive, said he did not wish to comment on the contractual dispute.

“I am not prepared to pour petrol on the fire,” he said.

“What I will say is it is true that there have been issues from time to time with the board.”

Mr Ryan said the disputes reflected board concerns about the company’s ability to meet forecasts.

“Over the months the board was concerned that the trend had to be arrested, otherwise it would be-come a major issue,” he said.

Mr Tate denied he had any agenda other than to see Skywest listed when he invested in the company, following earlier financial assistance to the founding syndicate.

But he said the longer his involvement with the company went on, the more he became concerned with its ability to meet its targets, or float at all.

Mr Tate said some of the un-orthodox features in Mr Meeke’s proposed contract also were of concern, a matter that had been the subject of negotiation before his arrival on the board in late February.

“Not enough shareholders had confidence they (Mr Meeke and Mr Cattle) were suitable directors to lead the company going forward,” he said. “Did I have an agenda because of Bill’s contract? No. I was happy to wash my hands of it when I left the board.”

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