Crypto Board Shuffle 'Vindicates' Former C.E.O.'s Activist Stake

15 May 2009
CryptoLogic Ltd., under fire in recent months over the independence of its board, has appointed David M.J. Gavagan, currently a non-executive director, as its new independent chairman.

This June, Mr. Gavagan will replace Robert K. Stikeman, who remains on as a non-executive director.

Mr. Stikeman and Javaid Aziz, the company's former chief executive, have been at odds publicly since December 2008, when Mr. Aziz took an activist shareholding in the company.

In a number of pointed letters to the board, Mr. Aziz called its decision to retain Mr. Stikeman's law firm as outside counsel a conflict of interest.

CryptoLogic has since discontinued business with Mr. Stikeman's firm, which collected just over $1 million in fees from the company in the 2007 fiscal year.

"The replacement of Bob Stikeman as the Chairman of Cryptologic represents a very positive move for the adoption of good corporate governance at Cryptologic," Mr. Aziz told IGamingNews in an e-mail Friday. "The appointment of David Gavagan, who has extensive business and M&A experience, as an independent Chairman is an extremely good one especially as he does not have any personal interests to protect."

In December, when the public conflict began between Mr. Aziz and the board, Mr. Aziz had demanded Mr. Stikeman's resignation as well as that of Yap Wai Ming, a non-independent director.

CryptoLogic proposed Friday that James Wallace, who is currently chairman of Scapa Group, the film and tape manufacturer, be appointed as a non-executive director.

Mr. Aziz said Mr. Wallace, if approved at June's meeting for shareholders, would replace Mr. Wai Ming.

"This completely vindicates the activist position I took earlier this year in specifically seeking these board room changes," Mr. Aziz said. "David Gavagan and the Board have my support and I wish them much luck and success."

Mr. Gavagan co-founded Hibernia Capital Partners, a venture capital fund that closed in 2006. He joined CryptoLogic's board in June 2008.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.