Leighton has elevated Bob Humphris to chairman as the construction giant seeks to quickly put the sudden resignations of three directors behind it.
Mr Humphris, who has a 50-year career in construction and mining, has been on the Leighton board since 2004.
He says board members “totally support” chief executive Hamish Tyrwhitt and his management team.
The market welcomed Mr Humphris’s appointment, as well as Paula Dwyer as deputy chairman.
At 1412 AEDT, Leighton shares had risen 4.85 per cent, or 98 cents, to $21.18. In percentage terms, the company was the best-performing stock on the S&P/ASX50.
“The fact that they’ve been able to appoint someone new from within the business so soon after the previous chairman departed is a good sign,” RBS Morgans private client adviser Craig Walker said.
“That’s a positive.”
Mr Humphris said the company’s immediate priority was to find new independent directors, with Ms Dwyer to lead a special committee of the board to oversee the process.
Leighton’s share price rally comes after the stock fell eight per cent in response to the dramas of last Friday, when Stephen Johns stepped down as chairman and left the company.
Directors Wayne Osborn and Ian Macfarlane – a former Reserve Bank of Australia governor – also tendered their resignations following a breakdown in relations with German construction company Hochtief, which owns a 40 per cent stake in Leighton.
“Their view is that Hochtief no longer supports an independent board at Leighton,” the company said in a statement on Friday.
Hochtief, which is majority owned by Spanish Group ACS, has two representatives on what was the company’s 10-person board.
In a letter to Leighton dated March 23, Hochtief Australia said it was disappointed by the resignations.
“We do not consider Hochtief has done anything to undermine the independence of the Leighton board or threatened any such action,” Hochtief said.
“For several decades, Leighton and Hochtief have chosen to follow a set of informal and non-binding governance principles which include a board and a management structure in which the majority of directors are non Hochtief-associated directors.
“Hochtief has at no time given the Leighton independent directors any cause to believe that it intends to depart from these principles.”
Mr Humphris said Hochtief letter confirmed the current governance arrangements relating to Leighton’s independence.
The trio’s sudden departure prompted ratings agency Standard & Poor’s to place Leighton on a negative creditwatch.
S&P credit analyst Craig Parker said that governance arrangements put in place by Hochtief and ACS had previously justified some limited separation of the credit quality between Leighton and Hochtief/ACS.
“However, with the resignation of the directors, the credit quality of Leighton could be affected by the parent’s weaker credit profile,” Mr Parker said on Friday.
