Marcus Leaver has resigned as chief executive from the Quarto Group with immediate effect.
In his place, Chuk Kin Lau, newly-appointed to Quarto’s board last week after a boardroom coup, will act as interim chief executive officer for the illustrated publisher.
Quarto founder Laurence Orbach, who returned as chairman of the board last Thursday in a surprise turn of events following the publisher’s a.g.m., thanked Leaver for his achievements as the announcement of his departure was made.
“I thank Marcus for his considerable achievements over the last five-and-a half years. He has raised Quarto’s profile within the industry. The continued output of very high-quality books is a testament to Marcus’s leadership and an impressive demonstration of the strengths of Quarto’s talented employees,” Orbach said.
“Quarto remains focused on producing great books for its readers during this period of managerial transition and we look forward to moving the business forward and build upon its strengths.”
Leaver thanked his staff for their "hard work and resilience" during his time at the helm.
“I would like to thank everyone at Quarto for their hard work and resilience during my tenure as c.e.o. In addition to our authors, illustrators and photographers, each and every person contributes to Quarto making great books and selling lots of them,” he said.
Lau is executive director of the Lion Rock Group, a printing firm, and has a 27% stake in Quarto. He was appointed to the board along with Orbach, who owns 20%, at last week’s a.g.m., in a shock development. At the same time, four directors were axed from the company: chairman Peter Read and non-directors Leslie-Ann Reed, Jess Burley and Claire Capeci. Along with Orbach and Lau, Lau's colleague Mei Lan Lam, Lion Rock Group Limited's c.f.o. and Quarto's former chief financial officer (1987-2015) Mick Mousley, were appointed in their place, with Orbach assuming the role of executive chairman.
Leaver was re-appointed to the board at the time, along with current c.f.o. Carolyn Bresh and non-executive director Andrew Cumming.
The company had a £47m debt burden as of the end of 2017 and a market value of £23.5m.
An internal memo sent to staff earlier in the week said the boardroom changes had been forced on the shareholders after a poor financial year, with Orbach indicating that he wanted to take the business back to its co-edition roots.
This was at odds with Leaver’s aims of building it as a publishing-led business, with a particular emphasis on the children’s market. There was also thought to be a disagreement about the levels of debt the group could carry, with Leaver having reduced it by 20% since he took over. A proposal to raise further cash from shareholders was voted down at the agm.
Staff are said to be concerned, particularly with Orbach’s past reputation as a tough boss. But in the email to employees, he is reported to have said his reputation was not as bad as rumoured.
Graham Bird, managing director for strategic equity at Gresham House Asset Management Limited, a top 10 shareholder in Quarto, told The Bookseller that he was concerned about how leaver’s departure would impact on staff.
“I am disappointed that Marcus has resigned and am concerned about the impact it may have on morale. However, there are lots of talented people in the business, and no c.e.o. is bigger than the business as a whole.”
He added that while he was disappointed, Leaver’s departure had not been a big surprise because the boardroom coup had probably made Leaver’s position “untenable”.
“It is clear that Lau and Orbach’s move was triggered by concern over the way in which the business has been operating in the last year, so undoubtedly there will be a difference of view from the c.e.o,” he said, adding “we are keeping a close eye on it.”
Earlier this week, the Bookseller heard that concerns over the company’s debt had motivated the boardroom coup.
Other shareholders had also called on the publisher’s new stewards to be clear about their next plans for the business.
“There is no indication of what they plan to do next," Paul Mumford of Cavendish Asset Management said on Monday (21st May). "They have got to come out with a statement saying what their plans are. Even if they come out with a holding statement saying ‘we are going to build up the company and inform shareholders of our future plans in due course’. I think they do need to say something so people believe in them.”
The boardroom revolt follows Orbach's removal as chairman and c.e.o. at a special meeting back in 2012. At that time Tim Chadwick, founder of Aurum Press, was installed as group chairman after two shareholders criticised Orbach's stewardship of the company. Activist investor Harwood Capital had forced the move, arguing Orbach had underperformed and not created value for shareholders.
Orbach originally brought Leaver into the business in 2012, with the intention of him becoming c.e.o. on Orbach's retirement in 2013, but the boardroom putsch accelerated this. When asked in 2016 if Orbach could return to the company in a profile interview with The Bookseller, Leaver gave an emphatic "no".
Quarto has streamlined its operation over the last 18 months to become a more “pure play” publisher, making several disposals last year. It also faced a profit warning and an offer to buy the company from “mystery bidders”, thought to be Chinese.
The company's financial results for the year to end of 2017 showed that operating profits had plunged 58% to £7.2m, although revenue had grown 1.4%to £152.4m.