Jamie Pherous Departs CTM Amidst UK Overcharging Scandal
Jamie Pherous, the founder of Corporate Travel Management (CTM), has left his role as managing director amidst an overcharging scandal in the UK potentially exceeding $150 million. The departure was announced on Monday, with the $2.3 billion company's shares remaining suspended.
Company Background
CTM assists clients, including Wesfarmers, the Australian government, and UK authorities, with travel arrangements. Mr. Pherous founded the business in 1994. The company's shares experienced significant growth after listing in 2010, expanding globally. Mr. Pherous held nearly 16.5 million shares, valued at $266 million based on the last trading price in August.
Details of the Departure
Corporate Travel described Mr. Pherous's departure as a mutual agreement with the board, reflecting a move toward stronger governance. Investment market sources expressed concern regarding the timing of the exit, given ongoing company challenges.
Mr. Pherous stated his decision to retire as CEO was "in the best interests of the company" to allow new leadership to focus on future tasks.
He will continue as a consultant for six months, receiving his fixed annual salary of $675,000.
The Overcharging Scandal Unfolds
The company's shares were suspended in August following an accounting review initiated after discoveries by new auditors, Deloitte. CTM later disclosed in November that it would need to reverse revenues recorded in the UK for the past three financial years, totaling 58.2 million pounds ($114 million) for the 2023 and 2024 financial years. An additional 19.4 million pounds planned for 2025 is also under review. The final refund amount is pending, and CTM has not yet detailed the specifics of the issues or affected customers.
The UK Home Office confirmed it was informed of overbilling and is investigating the situation.
The UK government had awarded CTM significant contracts, including for citizen repatriation during the COVID-19 pandemic and managing an asylum-seeker accommodation program.
New Leadership and Future Outlook
Ana Pedersen, CTM's chief commercial officer, has assumed the role of acting chief executive with an annual base salary of $1 million while a permanent replacement is sought. Ms. Pedersen acknowledged that the company's recent accounting challenges "have fallen short of expectations" and emphasized the need to strengthen controls.
UBS analysts noted Ms. Pedersen's background in travel and technology sectors, including 16 years with BCD Travel. CTM secured a new funding line of $140 million and reported $178 million in cash as of November. The company aims to have its shares reinstated for trading once accounting matters are finalized.