Union Says Management Crisis Creates Urgency for Governance Reform
The International Brotherhood of Teamsters is calling on Republic Airways shareholders to vote for the union's proposal to appoint an independent chairman of the board. The proposal — No. 4 on the company's proxy - will be voted on by shareholders before polls close at the company's Aug. 1 shareholder meeting.
The Teamsters are urging investors to support this corporate governance reform as a better structure for shareholder representation at the struggling company. The union asserts that current structure, with its close-knit board and conflicted lead director, makes investors vulnerable to the whims of a domineering chairman/CEO with no clear vision for the airline.
"Republic's chairman and CEO, Bryan Bedford, has created a costly identity crisis for the once-successful airline," said Ken Hall, General Secretary-Treasurer of the International Brotherhood of Teamsters, a long-term shareholder that represents nearly half of all Republic employees, or about 4,500. "We need to take Republic's board off autopilot so that we can stop squandering cash, antagonizing customers, and destroying employee morale."
The Teamsters, in its investor critique, "Independent Board Leadership at Republic Airways – The Final Frontier," detail their case for independent board oversight and the inadequacy of Republic's current board structure. Richard Schifter, a managing partner of the private equity firm TPG and Republic's newest lead director, is no substitute for an independent chairman because of his own conflicts of interest and compromised independence from management.
The report highlights what the unions says are many of management's costly mistakes and contradicting business strategies that have weakened the company's core, regional feeder business and hurt the company's chances for success in the branded carrier business that it entered after acquiring Frontier and Midwest Airlines in 2009.
"Investors need to know there is rigorous oversight of management at this critical time in Republic's history," Hall said. "With Barclays Capital, the bank Bedford tapped to help monetize Frontier Airlines, at the center of an international banking scandal and a pilot dispute that management has let fester for five years with no plan to resolve it now escalating, independent board leadership is needed now more than ever."