How Cordlife Group Ltd Can Move Forward From Its Current Ordeal Of Losing Its Chief Executive

Credit: Jordi Play

Cord-blood banking provider Cordlife Group Ltd (SGX: P8A) lost its chief executive, Jeremy Yee, when he abruptly resigned in March this year.

The company held a shareholder’s dialogue session back in May to discuss the issue with its shareholders.

According to Cordlife’s board, Yee’s contract was not renewed as he had failed to grow the company’s core earnings during his tenure. Moreover, Goh Jin Hian, who chairs the remuneration committee, commented that the committee had decided that Yee’s contract term granting him as much as 10% of Cordlife’s profit was not reasonable and should be renegotiated.

But, in a separate statement, Yee commented that he was not given a chance to renegotiate his contract and was only given the choice to leave or be terminated. Yee also pointed out that the chairman stated he was pleased with Cordlife’s year-on-year growth in the latest annual report, which is inconsistent with the earlier statement that Yee was unable to grow the company’s core earnings.

Whatever the true reason(s) might be behind the departure of Yee, the saga has showed Cordlife’s shareholders – and other investors who are watching – that the company’s board may not have any interest in being entirely truthful about any internal conflicts which could have ocurred.

Cordlife’s latest fiscal third-quarter earnings was released on 11 May 2016 and there was a big worrisome spot: The company had logged a quarterly loss of S$2.05 million. But, what may be more important for shareholders to note is that the honesty and candor of Cordlife’s board is now questionable.

The loss of investors’ trust have been painful for companies such as Noble Group Limited (SGX: N21) and Silverlake Axis Ltd (SGX: 5CP) – both saw their share prices collapse when the questions appeared.

Will Cordlife join the duo? It is now up to Cordlife’s board to build up trust again between the company’s insiders and investors.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any company mentioned.