Guess what Samsonite International SA's former CEO Ramesh Tainwala had in common with some past big names from the corporate world like Yahoo's Scott Thompson, Walmart's David Tovar and InterContinental Hotels' Patrick Imbardelli? They all had to step down from their jobs after being accused of resume padding.
According to Reuters, the world's largest luggage maker announced today that its CEO Tainwala has resigned. This development comes less than a week after Blue Orca Capital LLC accused Tainwala of lying about his educational credentials and attacked accounting practices that involved entities owned by his family.
Samsonite said in a statement that Tainwala had resigned for personal reasons but added that its board took the allegations about his academic credentials seriously and his departure was "in the best interests of the company and its shareholders". Kyle Francis Gendreau, the company's CFO since early 2009, has reportedly taken over as CEO.
The company also issued a 9-page response to other allegations made by the recently-launched activist investment fund Blue Orca, including poor corporate governance and accounting lapses. Samsonite reiterated its stance that the report was one-sided and misleading, and added that its auditor KPMG had not withdrawn its audit opinions, nor indicated it would do so.
"While the company is viewed as having made the right move with the management reshuffle, it could lead to some uncertainty," Linus Yip, chief strategist at First Shanghai Securities, told the news agency. Samsonite's shares had plunged 21 per cent in Hong Kong when the news broke, and the company had requested a trading halt since last Sunday. Today, on resuming trading and following news of Tainwala's exit, the stock surged up 12 per cent. The big question now is whether Samsonite has done enough damage control. That will determine the stock's journey in the near future. As Yip pointed out, some investors may take Tainwala's departure as proof that some of the allegations against the company are true, which means the current share rally may be short-lived.
Headquartered in Massachusetts, Samsonite is one of the few major foreign stocks listed in Hong Kong, alongside Prada and cosmetics firm L'Occitane International. Last month, the firm had announced a 19 per cent jump in its net profit in the first quarter along with a 21 per cent jump in revenue, led by robust sales of its Tumi brand products - a company it had acquired in 2016.
This was just one of the acquisitions that Samsonite had notched up under Tainwala's leadership.
According to The Economic Times, Tainwala was originally an entrepreneur in the plastic processing and consumer goods industry and a vendor to Samsonite. Over two decades ago, he formed a 40:60 joint venture with the company to form Samsonite South Asia Pvt Ltd. Back then the multinational was on the verge of exiting India after struggling to establish itself in the domestic market. Eventually, when the Indian business posted a turnaround with high sales traction, Samsonite convinced Tainwala to come on board as an employee to head its South East Asia and Middle East region based out of Hong Kong. He eventually took charge as Samsonite International's CEO in 2014. Samsonite is now valued at around $4.9 billion.
What a sorry ending so such a great career journey.
(With Reuters input)
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