Australian CEO James Hardie fired after his behavior endangered mass escape, Reuters reports

By Harish Sridharan and Shashwat Awasthi

(Reuters) – James Hardie (NYSE 🙂 Australia’s building materials giant Industries has fired its CEO after dozens of top executives threatened to quit his management style for a company that has been in a pandemic housing boom.

The world’s No. 1 maker of fiber-cement products said Jack Truong’s work interactions with 50 employees “violated the company’s code of conduct“ broadly and materially, ”but did not specify.

His dismissal underscores the growing importance that companies place on executive behavior, beyond traditional performance measures such as profits and dividends. Rio Tinto (NYSE :), Australia’s second-largest miner, and QBE Insurance, the country’s largest insurer, have lost two CEOs in recent years for their legal actions that their boards believe have crossed ethical lines.

Executive Chairman Mike Hammes James Hardie said in a conference call that Truong, who has been CEO since January 2019, had asked him to change his behavior after many employees threatened to quit as a result of his behavior.

Despite these calls, hiring an outside consultant and a third-party consultant to address the issues raised, “it was clear that no honest change had taken place,” Hammes said.

“He wasn’t ready to accept what caused the first problem … it wasn’t a chemical problem, it was much more basic than that,” he said.

Truong did not immediately respond to a request for comment.

The news initially put James Hardie’s shares nearly 11% lower on Friday, with losses down about 4% in late trading, compared to a 1.3% gain for the broader market.

“We’ve never seen anything like it before, but we appreciate the council’s decisive action,” Paul Quinn, an analyst at RBC Capital Markets, said in a customer note.

“This reduces the risk of a massive exodus from the company’s leadership level and, fortunately, indicates its ability to repair the damage done.”

The company appointed Harold Wiens, an independent non-executive director and former executive of 3M Co, as interim CEO while seeking a permanent leader.

James Hardie also gave a third chat in one year of his earnings forecast. He now expects a net adjusted profit of between $ 605 million and $ 625 million compared to an estimate of $ 580 million to $ 600 million in November. Chart: James Hardie shares have risen since the 2017 strategic transformation, https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnjbxnpq/Pasted%20image%201641507994887.png