01 August 2012
ENGlobal CEO Resigns
Rev. 1.8
First things first, understand where the news release attempts to take you from a psychological point of view. The actual headline reads: ENGlobal Appoints New Chief Executive Officer. The word “New” is designed to bring hope and change. I am not trying to create any associated illustration – it is just that in simple form.
I Love The Smell Of Burned Pizza In The Morning - It Smells Like.... Inevitability.
Edd Pagano has resigned and Mr. Coskey picked up the loose reins. Well folks that took some time to happen didn’t it? Wasn’t it just over a month ago Mr. Pagano was reelected along with the rest of the Directors overwhelmingly to the BOD? Didn’t he get an increased share of stock options (50,335 shares – 120% increase YoY) for his banner service? What does this tell how about how the BOD is managing your company’s business? To me this firing looks purely reactionary. I would prefer a BOD that is proactive. These behaviors further display the BOD is responsible just as much as Mr. Pagano is for his poor management and should be held accountable.
From the news release: "Mr. Pagano will be available in a consulting capacity through the remainder of 2012 to ensure a smooth and seamless leadership transition." As a consultant? This is probably another another way of saying Mr. Pagano is still "being paid". Let's put it this way - If you had the unfortunate experience of enduring a divorce would you go back to your ex-spouse for marriage counseling tips?
Reaction to What?
I believe the possibility of what happened was covered within the possibilities of the 2Q 2012 Predictions And "What Ifs" post. We know more about what permutation line we are traveling down. We now have “New” management or “New-Old” management. Whatever it is you are supposed to feel good about it, and it is certainly better than the misguided leadership before. So why did this happen?
There are a number of possibilities. This cannot be a good sign for 2Q results. As stated before in the 2Q 2012 Predictions post and for reasons given there I think 2Q is going to be awful. Given that probability what choice is left at this point, over 3 years, with the accumulation of losses. Mr. Pagano is not a scapegoat in terms of his actions. He deserves to be fired. He is, however, a scapegoat in terms of BOD responsibilities and them not performing their fiduciary responsibilities earlier, preventing this condition. Like I said, this is reactive.
The 2Q numbers have been in and the BOD knows them. If any bad results were being pushed forward to 3Q they should be taken in now. With Pagano’s departure they should take ALL the losses and give Mr. Coskey a chance in Q3. Still, it may be too little too late for a recovery. Let's hope not.
PNC may have lost faith in Mr. Pagano and informed the board with their own ultimatum given their powers from the controlling Credit Facility. PNC may have threatened to pull the plug, period. A government investigation could be taking place that has not manifested publicly. A reverse merger, corporation sale or asset buyout could be in the works. Any of these scenarios certainly would lessen the impact of a debilitating quarter and would render it moot by degree of the actual event level. You have to believe if these last three possibilities were to happen the plans would not include Mr. Pagano.
Mr. Coskey certainly can do a better job than Mr. Pagano, however, I think his taking over is for a company in transition. More big news is coming as stated before and it will happen soon. Two CFOs gone, one CEO gone with a multitude of Senior and Middle Management departed. Mr. Coskey has a talent for growing a company, and is one of the best entrepreneurs I have ever seen. Sure there were mistakes but that is a normal condition for true entrepreneurship. He likes to delegate with a “hands off” leadership style. That works better during good economic times, and not so well when close management is needed for recession periods. I mentioned this in past posts that when Hulda Coskey was involved they made a great team and everything ran better. Ms. Coskey did about everything in the earlier companies that Mr. Coskey didn’t do. Now that he has taken the CEO position she would be effective as COO, however, neither IDS or ENG ever went the COO route. She could perform CFO duties well, with her meticulous number control and attention to detail. The conference call should be interesting – no permanent CFO announced and another CEO trying to hold a company together. Good luck to everyone.
Comments are welcome.
Subscribe to:
Post Comments (Atom)
13 comments:
I am having some trouble understanding your position. Are you a current investor, journalist, or merely an enthusiast?
I ask because your coverage seems so complete.
See my reply in the comments section of ENGlobal Corporation: 4Q/Year-End 2011 & Conference Call Analysis. The comment date is 4/18/2012. We have significant family stock holdings. At one time I owned a little more than 1% of ENGlobal. My background is administration, research and analysis. I like to do everything thorough and complete. Thank you.
I appreciate that you have some confidence in Bill Coskey but Mike Burrow got ENG to where it was and then Coskey convinced the BOD to push him out. Later when they had no faith in Coskey the Board asked him to step aside to bring in Pagano and now they go back to the person they didn't think could pull the company out of a nosedive. I think the end of ENG is inevitable.
I whole-heartedly agree Mike Burrow was the vision that gave ENGlobal that initial ramp to greatness. I have made that abundantly clear in all recent posts and earlier. I would disagree that the BOD asked Mr. Coskey to step aside because I know who did. Bill Coskey subsequently stepped aside by his own decision. I think he made the right choice at that time. Mr. Pagano’s choosing, however, was Eddsel Pizza.
I don’t believe me saying, “I believe Mr. Coskey can do a better job than Mr. Pagano,..” displays as much confidence as you may think. I try to be fair and wait to see what his performance will be. Moreover, I did say I think his tenure will be more transitional. I think Mr. Coskey has been reluctant to take over the helm again for past experiences. If the company was expected to remain intact for a long time, do you think he would have placed himself back as permanent CEO? I don’t. I think one or more of the possibilities I laid out may occur. Thanks for the comment.
I received this comment from ‘Anonymous’ at 0054 this morning:
“Michael Bryant who replaced Michael Lee (now with Willbros) departed ENG on the 31st. He was a longtime ENG employee who produced results. [Third sentence left absent]”.
It is a good fact I know to be true. I appreciate the content as reflective to current events. I decided to publish it this way because it is important, however, the last part I left out is pure speculation as to why he resigned from ENGlobal. Though I may absolutely agree with you entirely from a intuitive standpoint I do not wish to publish speculation over a personal decision.
If you do not wish your comment to be posted as such let me know and I will remove it. Otherwise, thank you for the pertinent information.
Mike Burrow was the vision? Really?
I'd like to hear some facts to back that statenent up.
Sure, not only is it my opinion as many other observers feel - it is a fact. I attended all the Annual Meetings from IDS days into many years when ENGlobal was formed and operated. I used to spend a week in the Houston/Beaumont area, in and out of meetings with employees as well as most management. There was such a fine open atmosphere and culture then. I was selected to unveil the ENGlobal name at the first joined company Annual Meeting. That was an honor. In an early ENGlobal Annual Meeting Mike Burrow, then CEO and Chairman of the Board presented his plan to grow ENGlobal to a billion dollar company. With a PowerPoint presentation and dialog he spent much of that meeting articulating that plan. This is a well-known fact to any that was there and recorded in the Annual Meeting Archives. I also published it in my Annual Meeting Report on the Yahoo Message Boards, that may still be online as well but you will have to dig.
In subsequent years at Annual Meetings Mr. Burrow would update that plan, also well known to those that attended. When ENG had its first hiccup with the SLE project that was not of Mr. Burrow’s doing (I have discussed in previous posts thoroughly), he came up with the successful “Back-To-Basics” Plan. Even though Mr. Burrow was pushed out shortly there after, the plan was still being utilized and an upswing continued. Any plan has it limitations, especially without the architect steering it. So about 21 months later the two different management styles of the CEOs became apparent with the crashing economy.
Do some homework. Why do you think Burrow Global has grown and flourished in a horrible economy?
I wasn't defending the current management, I just believe that the initial statement was a bit of an exaggeration.
I am not trying to challenge you. I just asked for some back-up to your stement, which you are providing. You told me "do your homework". Asking someone to back up their statements is part of that process.
I have the data. I admit, not nearly as much as you, but I'm having to play catch-up.
As you see it wasn’t an exaggeration. It is all in archives and experiences of those who witnessed. ENGlobal’s Investor website has the archived Annual Presentation files to 2004, I just checked. I may add if you start up a company in today’s economy like Mr. Burrow did not only do you have to have vision you also have Guts! Yes, and money too, Burrow Global is an LLC! Its confidence like that that builds anything.
Homework: That may be your process and I agree to an extent. I like to do my homework before I put anything visible publicly with my mark. As a polite suggestion try and use MS Word or another processing program that will clear up spelling and punctuation errors. I have no control over that when I publish a comment directly. Thank you for the comments. Good luck to you.
PS - I got your irritated note back about the spelling and punctuation being a problem on your smart phone. I said it was a polite suggestion as you may notice. Like doing homework, plan your work so you don't look less than best. Attention to detail is a rule for professionalism. I make these errors all the time but I take measures to fix them and have others edit the work so that this website is the best possible for all. If you don't like being "graded" as you put it and I didn't mean it that way. Too bad. My blog - My rules. If you don't like it - don't read it and please post elsewhere on the common boards. This is simply a distraction from the salient issue.
They immediately removed Pagano and Wells from the management page of their website but still show Michael Bryant as EVP of Field Solutions. It would seem that they don't want shareholders to know that he resigned.
I've appreciated and respected the fact that your language is without bias and contempt but objective. Thank you for providing us with relevant, factual evidence, that supports your reports.
Bill Coskey and the BOD created this situation and have allowed all competent employees to be taken away leaving only those who cannot go elsewhere or are loyal to a fault. It is a sad situation and many will be hurt but this company cannot survive with the reputation it now has.
Post a Comment