Drumstick Awards: Five biggest corporate stuff-ups of 2023

The Triple Drumstick for corporate turbulence

Two years ago, Chook Roast awarded the then-unprecedented Double Drumstick to Oil Search, after it fluffed the departure of its chief executive following a behavioural complaint and then told the market it hadn’t received a takeover offer when it had.

Just when we thought that couldn’t be beaten, along comes Qantas.

The first ever Triple Drumstick recognises three moments of infamy. First, the company was found by the High Court to have illegally sacked thousands of workers during the pandemic. Then, it was taken to the Federal Court for allegedly selling tickets on thousands of flights it knew it had cancelled (it is fighting the claim). And to top it all off, chairman Richard Goyder allowed now departed chief executive Alan Joyce to sell $17 million of shares, even as these controversies and community fury at the airline’s service levels built.

To be honest, we’ve left a few other missteps out; the Triple Drumstick could have actually been a family-sized meal. But despite booming travel demand, Qantas’ share price remains in the toilet, and the arrival of a new chairman means there may be further turbulence to come.

The record profit the company delivered in August stands as a symbol not of corporate success, but of a failure to balance the needs of shareholders, staff and customers.

The Drumstick for corporate integrity

For years, even decades, PwC was the firm you called in to clean up a mess – it could write an independent report, recommend changes and oversee their delivery. But the days of the professional services giant pontificating over anything are done.

It’s got its own mess to clean up.

Revelations that the firm’s tax practice used confidential government information to its own advantage sparked an incredible chain reaction of events, with the firm forced to reform its culture, its governance and its entire structure after admitting it had put profit before purpose.

Well, eventually admitting. Former CEO Tom Seymour told The Australian Financial Review Business Summit in March that the whole scandal was really just a perception problem. It was a comment symptomatic of the firm’s desire to minimise its problems at every step.

But the sale of PwC’s government consulting arm to private equity for a pittance didn’t cauterise the wound suffered across the professional services sector. While PwC will need to fight for years to regain the trust of the community, regulators and governments, it remains to be seen whether the entire industry is forced to separate parts of its business, such as splitting the assurance and consulting functions.

The Drumstick for communications

Hello? Is this thing working?

Those were the questions millions of Australians were asking themselves on November 8, when the country woke to news that Optus’ mobile and fixed-line network had gone down, due to what was later revealed to be a tech upgrade gone wrong.

Having been rocked by a brutal cyberattack late last year, you may have expected Optus and chief executive Kelly Bayer Rosmarin would have been practised in the art of crisis communications.

But the company struggled to manage the crisis, with government ministers pleading in public for more information and Bayer Rosmarin criticised first for a lack of public statements, and then for some less than fulsome media interviews.

It later emerged that Optus’ scenario planning left a bit to be desired, and there were lingering questions about its relationship with its parent, Singapore Telecommunications.

The damage to the company’s brand and customer numbers won’t be clear for some time, but Bayer Rosmarin’s departure is a reminder that it’s not the stuff-up that matters, but the clean-up.

The Drumstick for financial planning

It’s hard to know whether to be full of scorn or full of amazement at what casino struggler The Star Entertainment Group pulled off this year.

In February, it went cap in hand to investors to raise $800 million to shore up its balance sheet and give it capacity to deal with several other pressing matters looming on the horizon.

CEO Robbie Cooke assured investors he’d taken the necessary action. “There is an element of conservatism in this definitely, but it positions the business for the next three years.”

But lo and behold, Star was rattling the tin just six months later, this time raising $750 million to keep the wolves from the door.

“Today’s announcement is a key milestone in the renewal of The Star,” he declared. “With an optimised capital structure, strengthened balance sheet and enhanced flexibility, we have a strong platform from which to deliver on our renewal program and strategic priorities.”

This second capital raising apparently positions the business for the next four years, which could mean anything in Star-speak.

Poor Cooke was brought in after Star’s previous board and management was all mostly cleaned out in a regulatory firestorm. But he’s since been hit by disaster after disaster, from a tax hike to a cost-of-living crisis that has whacked revenue.

The stock is on track to end the year down about 65 per cent.

The Drumstick for human resources

It’s very unusual for a company whose shares are near record levels to appear in the Drumstick Awards, but Fortescue, whose executive chairman is Andrew Forrest, is no ordinary company, and the level of change in its executive ranks this year has been surprising to say the least.

In January, chief financial officer Ian Wells departed. In August, the chief executive of the group’s mining business, Fiona Hick, left after just six months. Her chief financial officer, Christine Morris, followed quickly on her heels, just 90 days into her employment. More than 10 senior executives have left in the past three years.

Fortescue insiders have portrayed this as evidence of decisiveness – those who aren’t the right fit exit quickly. And it’s hard to say the business has missed a beat in the view of the market.

But this is now a $78 billion giant with huge plans. The balance of stability and entrepreneurship needs to be spot on.