A FEW weeks ago the Irish Times awarded the minted CEO of building materials giant Kingspan, Gene Murtagh, its ‘Business Person of the Month’ accolade.
At the time the gong was handed out at the start of October this year, Kingspan shares were trading at around €77.50, having risen by a dizzying 93% since a pandemic-related low in March this year.
The IT was naturally impressed at Kingspan’s ability to “outperform market expectations” but was not is a position at the time to also congratulate the 49-year-old for his good timing when it came to disposing of the high-flying shares. Less than two weeks later, on October 13, Murtagh exercised options he had acquired under the Kingspan group’s 2017 performance share plan. Those shares vested at 13 cent and the wily Gene immediately offloaded 43,120 of them at just under €80 to scoop an impressive €3.45m. Nice.
Luckily for Gene, the shares were sold before some disquieting allegations surfaced three weeks later in the second module of the Grenfell Tower Inquiry – which is examining all aspects of the fire that left 72 people dead in 2017 (coincidentally the same year as Kingspan’s generous share performance plan).
The module kicked off last month and is focused on “cladding products – testing/certification, product marketing”. The opening statement from Stephanie Barwise QC, acting on behalf of the survivors of the fire, included references to emails from staff at Kingspan that criticised the company’s own testing of certain cladding products. Moreover, the inquiry was also told that Kingspan had written at the end of October to the Building Research Establishment (BRE), which carried out testing on the Irish plc’s Kooltherm K15 cladding product, to withdraw the test reports it had used in its marketing since 2005. A product with a changed composition had been marketed from 2006 and this, it was claimed, had “a poor performance in fire”.
Richard Millett QC, counsel to the inquiry, said that this line of investigation, pursued by the inquiry over the last two years, “raises very serious questions about why the product was not withdrawn sooner”.
Earlier this week, it emerged that three years before the Grenfell Tower disaster, a fire expert had warned the UK’s national construction body that the increasing use of flammable materials on high-rise buildings was “an accident waiting to happen”. Dr Barbara Lane’s comments were made following concerns about fire test data underpinning Kingspan’s K15 foam insulation product.
Kingspan says it had “no role in the design or planning of the cladding system” used on Grenfell Tower. There will be plenty of interest in next week’s sittings of the inquiry, which start with two senior execs from the Irish company giving evidence: Adrian Pargeter – director of technical, marketing and regulatory affairs – and Richard Burnley, managing director of the insulation division (UK and Ireland).
With module 2 having kicked off on November 5, the seriousness of the issues raised about the test reports used for Kingspan’s cladding product were presumably behind a slide in the share price that halted what had been a near nine-month rise.
Today, the price is standing at a still impressive €68.50 approx, albeit 14% down on the price at which Gene Murtagh had offloaded his 43,000 plus shares. Happily, unbeknownst to Murtagh, by selling when he did, the CEO bagged an additional €1/2m above what he would have got if the deal had been done today.
To Business Person of the Month, we should add ‘Lucky CEO of the Month.
For more on Gene Murtagh see Goldhawk’s November 2018 profile, here.