Howard S. Cohen resigned last week as president, chief executive officer and director of GTECH Holding Corp., the West Greenwich-based lottery systems maker.
Cohen, 55, who served about 16 months at the helm of GTECH, cited “a desire to pursue personal and business interests and return to Chicago,” where he lived prior to taking the position at GTECH, according to a company statement.
W. Bruce Turner, GTECH’s chairman, will replace Cohen effective immediately, the company said. Turner served as interim president and CEO for several months prior to Cohen’s appointment after GTECH’s previous CEO, William O’Conner, was forced out, following the revelation that the company tried to cover up glitches in its software for Britain’s lottery.
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”It is my belief that the solid financial foundation that Howard and the senior management team have established will provide us with an excellent platform for continued growth,” Turner said in a written statement.
Robert Vincent, GTECH’s vice president of corporate communications, said Cohen gave directors his resignation at a board meeting Aug. 6, one day after the company’s annual shareholders meeting.
”I have no other insight into his motivations or reasoning, other than what he’s publicly cited,” Vincent said.
When asked if the company is concerned about what investors’ perception of Cohen’s abrupt departure would be, Vincent emphasized that the company reiterated its projected earnings for the second quarter and full fiscal year. He added that both Cohen and Turner have asserted that they are “more than happy” to personally certify GTECH’s financial results.
Vincent said Turner has been actively involved in the turnaround in GTECH’s operating results during his role as chairman, which bodes well for a smooth transition.
”With Mr. Turner we have a leader who is well-acquainted with GTECH’s employees, customers and shareholders, and in that regard it should be a relatively seamless transition.”
Cohen’s resignation came as a surprise to Tom Graves, a gaming industry analyst at Standard & Poor’s in New York who covers GTECH. But Graves said he has no reason to think that the resignation signals any significant underlying problems at the company.
“The timing is kind of surprising, but I think the departure of Mr. Cohen should not significantly undermine the progress GTECH has made in recent years improving its position with investors and customers,” Graves said.
Graves added, however, that the chronic turnover at GTECH’s highest post would be not be viewed favorably by investors. Cohen’s resignation marks the fifth time in less than seven years that GTECH has changed its chief executive.
”Certainly it would be the preference of GTECH’s investors and customers to have continuity of good management,” he said.
Cohen arrived at GTECH in 2001 at the end of a turnaround effort that was overseen by Turner, during which GTECH slashed more than $30 million in costs and laid off 250 employees. During his tenure, Cohen continued to streamline the company’s costs and laid out a plan to grow GTECH’s financial services business.
The result has been improved earnings and the first real appreciation in GTECH’s stock in several years. Last year the company posted an 8 percent gain in revenues. In both the first and second quarters of this year, GTECH’s earnings exceeded analysts’ expectations, and the company twice in the last few months has revised higher its earnings projection for fiscal 2002.
But it was Turner who was credited with helping the company recover from slowing revenues and the UK scandal. Graves of S&P said the appointment of Turner could work in the company’s favor.
”I think GTECH has some good bench strength with Bruce Turner, who is experienced in the gaming industry and has run GTECH before,” Graves said.
There was no public mention of Cohen’s pending departure at the Aug. 5 annual shareholders meeting, where shareholders voted in three new directors and approved a stock-option plan for the company.
During the meeting, Cohen said that GTECH had taken steps to bolster shareholder trust. He said GTECH already complies with most of the 13 recommendations for better corporate accountability recently put forth by the New York Stock Exchange, including having a majority of independent directors on its board of directors. Cohen had been the only GTECH employee on the board.
In its announcement of Cohen’s resignation, GTECH said it expects the board to elect a new, non-executive chairman “in the near future.”
Cohen’s comments reassured Abel D’Silva, a shareholder who is retired and lives in Cranston, that the company has nothing to hide.
”I’m concerned with all the corporate problems that have been happening, so I wanted to know what (GTECH) was doing,” said D’Silva, who has owned GTECH stock for more than six years. “I’m pleased that it sounds like they’re on the right road.”
