Originally Posted by
Hamley
Isn’t this what the board has been paid handsomely to do for years? If you have to get consultants in to do this, what have the board been paid for?
It is actually executive management's role to establish things like route structures, flight schedules and yield management/pricing structures, and adapt those to changing circumstances. The Board's role is to appoint the executive manager (CEO), review/endorse strategies developed by the executive, and monitor performance against the strategic objectives.
Given that deliberate role separation between oversight and execution, one very important, fundamental principle for board structuring is that the Board should be demonstrably independent of, and separate from executive management, and
vice versa regards executive management. Accordingly, the ASX sets out a number of recommendations to support this, specifically:
V- Recommendation 2.1: A majority of the board should be independent directors.
- Recommendation 2.2: The chair should be an independent director.
- Recommendation 2.3: The roles of chair and chief executive officer should not be exercised by the same individual.
Until the recent palace coup, Rex had
never conformed to any of those recommendations. Only three of the directors are independent. And, until recently, LKH, who is not independent, was both Chair and CEO. It was a model of dysfunction that was tolerated, probably due to force of personality, and the fact that until 2020 the business had made modest profits. The old normalisation of deviance process to a certain extent, in my opinion given quite the leg-up by cowardice and general lack of character in some of the players.
Any old how, it is where it is. Finally, a few Board members have summoned the courage to have the captain escorted from the flight deck. I agree with general sentiment that keeping that fellow out of the LHS is going to be essential if there's any chance of saving the show.
Unless something very untoward has happened in the past six months, there should be about $50 million in cash in Rex's bank account. That will give Deloitte some cushioning around deploying changes. Not a lot but it is certainly a markedly different circumstance to that facing most administrations where the business has no cash at all when the call is finally made.
Back to the Zen Master, "We'll see."