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An entirely new board tasked with turning around the fortunes of struggling wine company Australian Vintage (ASX: AVG) has overturned a major decision from their predecessors, bringing sacked former CEO Craig Garvin back into the fold to lead the company from 14 October.
Garvin's employment with Australian Vintage, known for such brands as McGuigan, Tempus Two, Barossa Valley Wine Company and Nepenthe, was terminated in May over conduct that allegedly "displayed a lack of judgement and was inconsistent with the values of the company and the high standards expected of its chief executive officer".
But the renewed board revisited the circumstances surrounding Garvin's departure and took a 180-degree turn.
"The new board of Australian Vintage is pleased to welcome Craig back to AVG. His appointment follows an external search that considered a number of exceptional candidates," says chairman James Williamson.
"After a thorough review of the circumstances and processes surrounding his departure from Australian Vintage in May, the board felt it was important for Craig to be involved in the search process."
Williamson, the chief investment officer (CIO) of substantial Australian Vintage shareholder Wentworth Williamson, joined the board in late August and has been acting as interim CEO after his predecessor Peter Perrin stepped down due to a cancer diagnosis.
The chairman says appointment of Garvin will help strengthen the company and take advantage of opportunities in Australia and international markets. The returning executive led the company from November 2019 to May 2024, and before that was CEO of leading dairy manufacturer Parmalat for nearly a decade.
"Craig’s track record at AVG, his leadership style and deep understanding of our industry and our partners make him the right person to lead the company," he says.
"He is a respected and well-liked leader who successfully led the change at AVG in a challenging environment. This included the development and implementation of the company’s five-year strategic plan, which transformed the company into a consumer-led business with a commitment to innovation.
"His appointment, after a difficult period for the company, highlights the board’s laser-like focus on restoring shareholder value.
The new board also comprises Michael Byrne, Elaine Teh and Margaret Zabel.
"Craig has demonstrated his ability to create an effective high-performing team, build a strong culture, and develop enduring relationships with customers and other stakeholders," says Zabel, who chairs the board's people, remuneration and nomination committee.
"He is the right person to take Australian Vintage forward, and we are looking forward to working with him to create value for our shareholders to deliver great wine brands to our customers."
Garvin will be on a fixed salary of $600,000 plus a long-term incentive plan. In the last reported annual remuneration for him in FY23, his salary and fees stood at $712,941.
The decision to sack Garvin threw a proposed merger with Accolade Wines into turmoil, and since then AVG shares have lost more than half their value. This is despite marginal revenue growth of 1 per cent to $261 million in FY24 and double-digit EBITS growth to $13 million.
In contrast, the statutory result was $86 million in the red amidst a change of strategy that involved a non-cash impairment to inventory and reducing its fixed grape supply, with the latter implying deferred tax assets. In July the company exited a lease in the Riverina that accounted for more than a fifth of all the grapes it crushes annually, and also sold its Lyndoch vineyard to Seppeltsfield.
AVG shares rose 3.23 per cent in early trading to 16 cents per share.
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