In June 2014, when The AA was taken public in what was described as a management buy-in, chartered accountant Bob McKenzie was appointed as its chief executive on a base salary of £750,000 and a package, with various benefits, worth some £1.2m per year.
On 1 August 2017 he was sacked for gross misconduct after he was reported to have to have got into a hotel bar fight with one of the Company’s senior managers. He was reported to have engaged in “a sustained and violent attack” on the manager which was captured on the hotel’s CCTV. Days after the incident he was removed from the board. As a result of being dismissed for gross misconduct, thereby disqualifying himself from any further contractual benefits, he stood to lose what was estimated at the time to be about £100m in share awards. Following his dismissal Mr McKenzie admitted himself to hospital suffering from work related stress.
He was known as strong boardroom performer, driven by financial returns. In an interview with The Sunday Telegraph in 2016 he said of his employment prior to joining The AA:
“Work hard and play hard: you were given targets and you met them or else you parted company.”
Shortly following his appointment, chief executive Chris Jansen left abruptly, followed finance director Andy Boland. Mr McKenzie assumed the (much criticised) dual role of chairman and chief executive, assuming greater power in 2015 by absorbing the duties of executive director Nick Hewitt, architect of the business plan that led to the float, who also left abruptly.
Mr McKenzie instructed top City firm Bird and Bird and in January 2018 The AA declared that it was “astonished” that Mr McKenzie had commenced an unfair dismissal claim in the employment tribunal, with the intention of bringing a wrongful dismissal claim for “tens of millions of pounds” in the High Court.
Fast forward to March 2018 and the High Court wrongful dismissal claim has been filed and its contents (perhaps conveniently) leaked. In his evidence Mr McKenzie has claimed that The AA did not care about his mental health. However, he admitted to having punched Mike Lloyd, Head of AA Insurance, saying that he was deeply ashamed by what he had done. The row had started because Mr McKenzie opposed a plan (now abandoned) to merge with Hastings Insurance and claimed that he had been “kept in the dark” about negotiations with the other insurer. Mr McKenzie said in evidence that the incident followed months of stress when he was regularly working ten hours a day, six days a week. In a medical report submitted on his behalf, it was noted that he had taken three Diazepam tablets on the day of the attack, plus two bottles of beer at lunch and two to four glasses of wine in the evening. The pleadings also disclose that a clinical psychologist, who saw Mr McKenzie four days after the incident reported that he had been suffering months of:
…raised anxiety, sleep disturbance, concentration loss, forgetfulness, increased emotionality (sic) and reduced emotional self-regulation with irritability and outburst of anger”.
“These symptoms could be the consequence of a progressive neurological illness but the symptoms could also be the consequence of a toxic combination of extremely high stress levels over the last few years including feeling completely undermined by his executive colleagues and taking on unreasonable levels of responsibility…Bob needs to be treated by the company as if he has had a heart attack and be signed off work for approximately six months.”
He claims that his dismissal was a device to be able to classify him as a “bad leaver”, thereby entitling the company to acquire his “management value participation shares”, estimated in the claim to be worth between £85m and £220m.
Earlier this month The Daily Telegraph published an article (with no indication of its source), alleging that Mr McKenzie was involved in a street brawl in 2016 during which he punched a woman, Catherine Dodkin, in the mouth, with her suffering a split lip. Mr McKenzie broke his leg in the incident but it is claimed that he concealed the details from The AA, claiming that he had tripped on the pavement. Mss Dodkin is reported to have said that she is willing to give evidence on behalf of The AA at the forthcoming trial. In response, according to The Times, Mr McKenzie has instructed Rosenblatt Solicitors to pursue proceedings for assault against Ms Dodkin. He maintains that Ms Dodkin scratched at his wife, pulled out his hearing aid and threw it down the road and then made a lunge for his wife when he attempted to restrain her.
All very unedifying but it has the makings of a fiercely contested trial in which the stakes are very high indeed. Of course, the case is noteworthy because of the post that was held by the claimant and the value of the damages claim. However, scaled down, it is ultimately just like many a claim and counterclaim relating to alleged wrongful dismissal. I think it is fair to say that, as matters stand, the prospects for settlement are not high so I expect that I will be reporting the trial and its outcome, probably later this year.