SEVEN West Media is standing by its embattled chief executive Tim Worner despite a series of salacious sexual allegations which today saw the company’s share price plunge a staggering eight per cent.
In a statement released last night, Seven West Media agreed that the inappropriate consensual sexual relationship made public by Ms Harrison is deeply regrettable and the Chairman has always made clear to Mr Worner that the alleged conduct, even though a personal matter, was completely unacceptable.
However the statement also read: “The fact is a confidential settlement deed was entered into more than two years ago with the former employee, Ms Amber Harrison, who was represented at the time by Harmers Lawyers who (Seven understands) have since ceased acting on her behalf. The settlement deed was approved by the relevant board committee of Seven and continues to be binding.”
Mr Worner said in the statement: “This relationship finished some years ago and I apologised at the time, and am still trying to make amends. I am obviously filled with the deepest regret and shame. My focus is to continue to work through this in private and minimise the distress to my family. They are the most important people in the world to me and I will continue to fight to repair the damage I’ve caused.”
It is also understood that Seven West has spent $1 million in legal bills in dealing with the 18-month affair.
“Take television out of it,” said one media industry executive, who asked not to be named.
“In any other corporate environment, if your CEO’s romantic dalliance cost the company’s shareholders $1.2 million-plus, they would be shown the door. The fact that Worner is still in the job says a lot about Seven.”
Investor advocate and Australian Shareholders’ Association director Stephen Mayne said it was unacceptable that Seven hadn’t made a statement to the Australian Stock Exchange.
“I’ve never seen the public disclosure of an affair cause an eight per cent share price collapse in an ASX 200 company,” Mr Mayne said. “This is a material issue for investors and Seven’s bunker mentality is totally unacceptable.”
The company’s approach on Monday undermined investor trust, he said, and runs of the risk of “reputational damage” with the media giant’s advertising clients.
“You can’t spend a million dollars in legal fees on an issue that’s arisen from the conduct of your CEO without properly levelling with your shareholders about why you’ve done that,” Mr Mayne said.
Seven’s board of directors are bound by a 12-point code of conduct, including that they should not “engage in conduct likely to bring discredit upon the company” and that directors “must act in the best interest” of the company.
Mr Mayne agreed that a breach of the code of conduct may have occurred in this instance.
“The board is arguably complicit here because they appointed Worner as CEO (of the group as a whole) after this had happened,” he said.
“Clearly now the board is looking embarrassed at having made this appointment and then had the issue drag on expensively and distractingly for another two years.”
On whether Mr Worner should be sacked, Mr Mayne reserved his position until Seven fronted investors with an explanation.
If that doesn’t occur, heads should roll, he said.
“Then pressure will need to be brought to bear on directors, including chairman Kerry Stokes. The buck ultimately stops with him. If Kerry Stokes isn’t prepared to level with shareholders on an issue like this, then questions need to be asked about his chairmanship.”
Another media industry pundit, who declined to speak on the record, was sceptical the scandal would cost Mr Worner his job.
But if enough damaging headlines and pressure were brought to bear, Kurt Burnette, Seven’s chief revenue officer, is regarded as a likely successor.
For two years, an army of the company’s lawyers and human resource personnel have been tied up in the messy aftermath of their boss’ personal indiscretions.
Ms Harrison claims Seven’s legal bills are running at $1 million and it has already paid her a $100,000 settlement plus $40,000 towards earlier legal fees.
She herself claims to have spent an additional $300,000 on lawyers.
Seven West Media’s share dived throughout the day, falling a total of 10 per cent before regaining two per cent by close.