Organigram (OGI.V) put out a news release this morning that contained news one might consider to be negative, and they didn’t even wait for a Friday afternoon to release it, which is a total break from tradition.
Denis Arsenault, CEO for the last three years, has stepped out of the Chief Executive’s La-Z-Boy and handed the reins over to.. well, let’s let the Globe and Mail punch out the details:
Organigram Inc., which was discovered selling products containing a banned pesticide that produces hydrogen cyanide when heated and can cause serious health problems in those who consume it, announced Wednesday that Greg Engel has been appointed CEO, taking over from Denis Arsenault.
Mr. Arsenault, who ran the company for the past three years, is moving to the board of directors as executive chairman, Moncton-based Organigram said in a press release issued before markets opened.
Arsenault moves to the newly created role of Executive Chairman, while the new CEO will be the former CEO of Tilray, Greg Engel.
“What’s that?”, I hear you asking. “Executive Chairman?” Why promote a CEO who has so roundly screwed up his company?
So here’s the deal: Arsenault has been buying stock hand over fist of late, to secure his position at Organigram. When it became simply bad business to keep him around, rather than kick him overboard into retirement and watch him savage the company share price by dumping his holding, it became far more prudent to shove him in a corner office, cover his Tim Hortons bills, and wait for him to lose interest.
Greg Engel is a legit hire, and if his first action was to put this news out at a time when people might actually see it, it bodes well for the future.
At the same time, the Organigram website has a big ass mea culpa on the front page, admitting that they’ve screwed up with the product recall and they’ve disappointed themselves (and others). That’s a nice change to the attempt they made at burying the news the first time around (although it appears they’ve moved all news releases off their investor page, which is scuzzy).
In fact, they’re even changing the compensation options for recall-affected patients, who were pissed at being offered ‘credit on future purchases’ when they had no intention of purchasing again in future.
Some of you have questioned our proposed compensation plan. The initial plan was developed before we understood the full scale of the recall, and was based on what preliminary research determined to be industry-standard. We’ve listened to client comments and we are excited to announce that we will be providing all clients without insurance coverage full credit for affected purchases. This credit will be communicated to each client individually and confidentially very shortly.
The company has also finally removed the ‘organic’ boast from the front page of their site, since they had their Ecocert accreditation suspended.
Organigram stock held up well, despite all this mess, over the last few months, though they didn’t see the same price upswing competitors did in the same time. The stock has climbed a few percentage points on the CEO removal news, though messageboards are seeing some furious debate over whether kicking Arsenault upstairs is enough to fix the problem.
Just two days ago, Arsenault announced his investigation, into how myclobutnail got into his organic medicine supply chain, had come up short, and that the company could not determine how the pesticide may have come in contact with nearly a year’s worth of product.
It appears that was the end of Arsenault’s rope, and he now joins former Mettrum CEO Michael Haines, who was let go by Canopy Growth Corp when they took out his old deal, as the second executive to have lost his jersey through trying to shortcut the system.
I know, I know, ‘executive chairman’ is not ‘fired’, but he’s not fooling anyone with the wording in his news release. Arsenault was fired – at least as fired as you can be when you’ve filled your pockets with stock.
We called for Arsenault’s dismissal way back in the New Year, when OGI was slipping recall notices out in Friday afternoon news dumps, and today’s news feels like vindication, and a positive reset for Organigram going forward.
— Chris Parry
FULL DISCLOSURE: Organigram has owed us money for nearly two years, so we’re predisposed to not supporting them, but we’ve made no secret of the fact and believe the situation involving the company and its patients warranted an executive shakeup. As of today, we consider the debt paid.