Paperlinx chairman tells new CEO: keep restructuring

David Allen has been confirmed as chief executive after assuming the role in an interim capacity in August.

Joost Smallenbroek has been promoted to chief financial officer from his previous role as the corporate finance director for Paperlinx Europe.

Both men will be based in Europe as they try to revitalise the struggling merchant, which has accumulated $1.4 billion of losses since last returning a profit in 2007-08.

Chairman Michael Barker said Allen had already helped identify $15 million of cost-saving initiatives and would "continue this rapid restructuring and return Paperlinx to profitability in the shortest possible time".

He added that Smallenbroek's "thorough understanding" of Paperlinx's problems and the challenging market would also help the return to profitability.

"These appointments, along with many other restructuring initiatives, place Paperlinx in the best possible position to deal with a difficult market and legacy management issues," said Barker.

[Related: Price joins Paperlinx]

"It was apparent to the new board, almost immediately, that in order to turn the company around there had to be a major cultural shift within.

"A key element of this shift is the complete redesign of the remuneration scheme. Our remuneration system now ensures that shareholder returns are the priority."

Allen's salary will start at £421,000 ($647,000). Bonuses will be paid based on meeting safety targets and financial criteria, which include earnings, return on funds employed and the performance of special projects.

Paperlinx hybrid securities investor representative Graham Critchley welcomed the two appointments and Allen's incentive-based contract.

"It’s encouraging that the board filled these positions internally. This is both a significant cost saving and gives hope for other aspiring executives who embrace the 'cultural shift' referred to by Chairman Barker," he told ProPrint.

"The chairman’s repeated assurance that 'shareholder returns are the priority' is again welcome because of the hybrid [holders'] priority entitlement to income and capital."

Allen and Smallenbroek joined Paperlinx in 2004.

[Related: Ups and downs of Paperlinx]

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