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Realestate.com.au sacks chief executive Simon Baker

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Classifieds company REA Group, owner of market-leading realestate.com.au, has sacked long-time chief executive Simon Baker after reappointing him to the position in early March.

Classifieds company REA Group, owner of market-leading realestate.com.au, has sacked long-time chief executive Simon Baker after reappointing him to the position in early March.

Chairman Richard Freudenstein said in a stock exchange announcement yesterday that Baker was no longer the man to run the company, which he had grown from a single Australian website into a global business with operations in 10 countries, publishing 22 websites and eight print publications.

“Now the board feels it is time for new leadership to take the business to the next level,” Freudenstein said in a statement. “The board would like to thank Simon for his contribution to this success and we wish him well in his future endeavours.”

But yesterday’s statement is in sharp contrast to the announcement of Baker’s reappointment as chief executive from 7 March.

Back then, Freudenstein was full of praise for Baker. “We are extremely pleased that Simon has agreed to extend his commitment to the company. His vision and drive have tremendously benefited the business over the last seven years and the company is now well positioned to continue to grow into the future.”

From the outside, it’s hard to pinpoint the reasons for Baker’s sacking.

Financial results are certainly not a problem. In yesterday’s statement the company reaffirmed its strong profit guidance for 2007-08, with earnings before interest, tax, depreciation and ammortisation tipped to be between $35 million and $37 million (up by 49% to 57% on last year). Revenue is expected to increase 41% to 46% and the number of paying agents on the company’s books will grow from 5400 to 22,400.

The company’s stock price looks OK too. REA shares have been under pressure, falling 12% from $4.32 on 7 March to $3.80 yesterday, but that is quite a respectable performance, given that the ASX small company index, the Small Ordinaries, has fallen 13.2% during that period.

The company’s hasn’t changed its aggressive growth strategy since March and has acquired two businesses in Britain and increased its stake in its Italian subsidiary. The company says the strategy will not change.

Sources close to the board says directors decided recently that the chief executive needed experience running a global company. It is believed Baker was seen as someone who could take the company from start-up to medium sized company, but was not the person to take the company to the next level. When the decision was taken to dump Baker, the board moved quickly.

The REA board is controlled by media monolith News Corporation, which owns 58.4% of the company and has three employees on the board; chairman Richard Freudenstein, Alasdair MacLeod and Stephen Rue. Other board members include real estate agents John McGrath and Sam White (from the Ray White group), former KPMG partner Roger Amos and professional director Kathleen Conlon.

Baker will walk away with a payout of around $300,000 and also owns a large stake in the company, worth $11.8 million.

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