Extraordinary general meeting called as Sequoia faces leadership shake-up

Sequoia shareholders are due to hold a vote regarding the removal of chief executive Garry Crole and director Kevin Pattison.

The company confirmed that multiple shareholders, who together hold 5 per cent of the votes that may be cast at the general meeting, have called for an extraordinary general meeting (EGM).

This is calling for chief executive Crole and director Pattison to be removed effective immediately and for Brent Jones and Peter Brook to be appointed as directors in their place.

Both Crole and Pattison had been appointed to the board in early 2019 while Jones has been the firm’s head of professional services since December 2017. He previously spent 15 years as managing director of Interprac which was acquired by Sequoia in 2017.

Meanwhile, Brook has been chair of Diverger – which was recently acquired by Count – since December 2021, having previously been chair of Xplore Wealth in 2019.

Crole confirmed to ifa’s sister brand, Money Management, that a meeting has been called and is expected to take place on 4 June.

A presentation on the ASX stated that if the current board is retained, it commits to streamlining the current operating business model, streamlining the divisional business structure, being open to divestment opportunities for non-core businesses, and increasing scrutiny on underperforming parts of the business.

Under the proposal, Crole’s position would enter a new contract that provides for a successor to be identified who would take over during the two years to June 2026. Crole would also be subject to revised KPIs with a “sharpened focus on underperforming business units, revenue/margin growth across licensee services and professional services divisions”.

Speaking to Money Management, Crole said: “I am looking to remain as a director long term and will look to retire as CEO prior to June 2026. In that period, I will be looking to appoint a person to groom into the role as my replacement from within the business and will keep the market informed of this over that period.

“On retirement as CEO, I would like to stay as a non-executive director at this stage.”

Last week, the firm announced the departure of chair John Larsen after five years on the board and appointed non-executive director Charles Sweeney as his successor.

The presentation also highlighted that since Crole’s appointment as CEO in 2019, funds under advice in the business have increased from $3 billion to $12.5 billion and its licensee services business has experienced the largest organic increase in adviser numbers across all licensees.

It expects to deliver $130 million in revenue in FY24, it said.

However, it has seen upheaval in its Direct Investment division and is seeking $3.5 million in damages from Tim McGowen following the acquisition of digital content platform Informed Investor, financial news website ShareCafe and Corporate Connect Research.

The firm said at the time the acquisition “increases the scale of our direct division and specifically enhances aspects of our media, research, adviser support and technology platforms”.

However, in a business update in January 2023, the firm acknowledged the integration of the three companies had taken “longer than anticipated” and that it was “causing short-term pain to its bottom line”. The delays had caused the Direct division to fall short of the EBITDA budget by $500,000, it said.

McGowen has since filed his own counterclaim for damages of $1.1 million.

In a statement on 8 April, it said: “McGowen is counterclaiming damages in excess of $1.1 million, the bulk of which comprises the deferred consideration that Sequoia did not issue McGowen in light of the claims Sequoia has raised against McGowen.”