SNC hires American CEO
Aug 13, 2012 / 8:55 pm
SNC-Lavalin's choice of an experienced American executive to head the Quebec-based engineering giant will be well-received by the beleaguered company's investors, despite some political concerns in the province that he doesn't speak French, analysts said Monday.
Robert Card, a senior executive at CH2M Hill Companies and former undersecretary of energy in the U.S., will take the reins Oct. 1.
He was chosen after a global search for leaders outside the Montreal-based company, which has recently been mired in scandal.
Former CEO Pierre Duhaime stepped down in March amid controversy over millions in mysterious payments in North Africa.
Card and his family plan to move to Montreal and learn French, but the naming of an anglophone to head one of the province's marquee businesses is sure to upset some Quebecers in the midst of a provincial election campaign.
Concerns have been raised about a hostile bid to acquire Quebec's hardware giant Rona (TSX:RON) by U.S. retailer Lowe's.
There were also some grumblings when bilingual Ontario-born Michael Sabia was chosen to head the Caisse de depot fund manager, despite his long-time Quebec residency, and when unilingual George Cope was picked to head Montreal-based BCE, while he lives in Toronto.
Parti Quebecois leader Pauline Marois said Monday that SNC should require Card to take French lessons so that at least he becomes bilingual.
SNC-Lavalin (TSX:SNC) spokeswoman Leslie Quinton said the ideal candidate to head "this great Quebec institution" would speak French.
"However, at a time when the company requires strong, decisive and insightful leadership, the most important criterion was to hire the best overall candidate with significant international experience," she said in an email.
Quinton added that the company has a global reach and that attracting someone with such extensive experience demonstrates that Montreal is an attractive international location to which such people can be recruited.
Analyst Frederick Bastien of Raymond James said Card's appointment may not be initially well-received by the average Quebecois who expected another francophone to head the firm.
"But we are of the view that SNC shareholders should be pleased that the firm has managed to attract someone with Mr. Card's experience and reputation," he wrote in a report.
In a report, the Vancouver-based analyst said the SNC-Lavalin board's key focus was to identify an experienced senior leader with both an extensive background in the international engineering and construction sector and a deep understanding of the complexities of operating internationally.
"At first blush it would seem SNC accomplished just that."
Card served as president of CH2M Hill's energy, water and facilities division and earlier headed its government, environment and nuclear division.
Privately-held CH2M Hill is a Fortune 500 engineering firm with 30,000 employees in more than 80 countries and $6 billion of revenues. It has competed against SNC-Lavalin for many contracts.
Analyst Maxim Sytchev of Alta Corp Capital said investors will be pleased that SNC's board selected an outsider to help instill a perception of a clean start to re-establish investor confidence in the company.
He said Card's U.S. government pedigree will prove invaluable to help SNC expand its presence south of the border, where it is running two private-public partnership projects. Only 3.4 per cent of SNC's total corporate revenues are derived from the U.S.
"Clearly having somebody who was the undersecretary of the department of energy, I'm sure that he's got a pretty nice Rolodex to delve into," Sytchev said in an interview.
He expects Card will eventually guide SNC to expand its U.S. footprint, especially in private-public partnerships. Card's first focus is to ensure governance changes are appropriate before deciding if any changes are required in about six months, he said.
Sytchev dismissed any concerns about Card's inability to speak French, saying SNC is a global firm.
"The company and the board of directors answer to the shareholders, not to anybody else."
Pierre Lacroix of Desjardins Capital Markets said the appointment of an outsider will bring "fresh eyes" to the company's management and governance practices.
"While we view the appointment of a new president and CEO as a positive catalyst for the shares, we believe the market reaction should be gradual until Mr. Card elaborates on his strategic vision for SNC," he wrote in a report.
Card and board chairman Gwyn Morgan declined requests for interviews until the new CEO assumes his duties.
On the Toronto Stock Exchange, SNC's shares closed at $37.28, down 22 cents in Monday trading.
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