By Svea Herbst-Bayliss and Pratyush Thakur
(Reuters) -Industrial equipment auctioneer RB Global Inc said on Wednesday it replaced its chief executive officer, Ann Fandozzi, who recently spearheaded a $7.3 billion acquisition, amid a dispute over equity compensation.
The company, formerly called Ritchie Bros (NYSE:RBA) Auctioneers, said Jim Kessler, its former chief operating officer and president, has been named CEO. It also fired its chief financial officer, Eric Jacobs.
The company gave a second-quarter earnings preview, reporting that revenue jumped 128% to $1.1 billion and net income climbed 63% to $86.8 million. Service revenue surged 181% and inventory sales revenue rose 52%, the company said.
Investors, however, focused on the management turmoil, sending RB Global shares on the New York Stock Exchange down 10% to $58.72 in afternoon trading and assigning the company a market value of $10.6 billion.
Fandozzi and Jacobs' departures are "unrelated" to performance, financial reporting and results of operations, the company said, saying they pertained to executive compensation structure negotiations. The company said Fandozzi asked the board to approve a program "out of step with market standards."
The compensation package, which was for Fandozzi and her team, was comprised of performance-based stock units and stock options, with no cash involved, according to people familiar with the matter. She told Reuters that it aligned management's interests with the company's.
"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 said.
Fandozzi in March secured the backing of the company's shareholders, including activist hedge fund Starboard Value, in a vote on its acquisition of U.S. auto retailer IAA (NYSE:IAA), despite proxy advisers' Institutional Shareholder Services and Glass Lewis recommending that investors reject the deal.
Kessler, who joined in 2020, played a major role in the due diligence underpinning the IAA deal, the company said.