Scotia commentsIn a Surprise Move Pembina's CEO Steps Down
OUR TAKE: Negative.
In a surprise move, Mick Dilger has stepped down as the CEO of Pembina Pipeline to pursue other opportunities. We are quite surprised by this announcement, especially given how well telegraphed the prior management transition was in 2014.
We do not believe the announcement was due to problems with financial results or reporting. In terms of other opportunities, we do not see any easy fits and do not believe Mr. Dilger taking another role was the cause of the announcement. We expect that if this was a normal course retirement it would have been better telegraphed. It could have been driven by a disagreement with the Board about the best path forward longer term for the company - but this would be a surprise to us.
We expect the shares will react negatively given the additional uncertainty on the name. That said, we do not see a change in Pembina's strategy for 2022 of increasing returns on existing capital and potentially re-starting some deferred growth projects. Until a permanent CEO is named, we doubt there will be any bold moves from the company, specifically M&A.
KEY POINTS Scott Burrows to be interim CEO. Mr. Burrows is well known, and in our opinion, well liked by the investment community. He has been Pembina's CFO for the past seven years and prior to that held a variety of capital markets, corporate development, and investor relations roles in the company. The Board will work with a search firm to identify internal and external CEO candidates. We believe that Mr. Burrows is a likely successor if an internal candidate is chosen. Though we note that Harry Andersen, SVP & COO Pipelines, Jaret Sprott, SVP & COO Facilities, and Stu Taylor SVP Marketing and New Ventures & Corporate Development will likely also be considered. Cameron Goldade will be named interim CFO - who is also well known by the investment community.
A non-orderly transition. We are quite surprised by the timing of the announcement and expect investors will be equally surprised.
Mick Dilger was a well liked CEO who had been key in Pembina's strategy for a long time. When Mr. Dilger was appointed CEO in 2014, the announcement was after a very orderly and well telegraphed succession plan. In contrast, this announcement seems like a surprise. We do not believe that this announcement was a result of any problems with 2021 results or financial controls. Guidance reiterated. The company reiterated its 2021 guidance and also continues to plan to announce its 2022 guidance and capital plan in early December.