Investors outraged as Reed Health founder ousts his chief executive

Reed Health's four non-executive directors are today expected to hold a crisis board meeting to discuss strategy after the company's major shareholder, the Reed family, ousted both its chief executive and finance director.

Separately, institutional shareholders in Reed Health were yesterday considering whether to order an extraordinary general meeting (EGM) to get the pair reinstated.

The chief executive, Christa Echtle, and finance director, Desmond Doyle, the company's only executive directors, were fired at its annual general meeting on Tuesday.

In a move that has stunned the City, the Reed family, which owns 45 per cent of Reed Health – a recruitment agency for the healthcare industry – used its votes to block their routine re-appointment at that meeting.

The company's chairman, Lord Sawyer of Darlington, and the group's three non-executive directors who include James Reed, the son of founder Alec Reed, Alan Dexter and Daphne Statham are due to meet today.

One source said: "They [the non-execs] are having a meeting [today] and I'm sure they'll be considering whether to encourage the institutions to call an EGM or whether to sell the business. There are no other options. The alternative is that you end up with a management team who'll have no credibility."

A spokesman for Reed Health, which was demerged from Reed Executive in the summer of last year, said the company had expected to hold a straight forward AGM. Alec Reed has not yet explained his reasons for the sackings other than to say there had been a "breakdown of trust" in the pair's "corporate governance".

The move has infuriated the company's institutional shareholders who said yesterday they were still no closer to understanding the reasons behind the dismissals.

One institutional shareholder said: "Everyone's in intensive care. We're all in the dark and it's a very unhealthy situation for shareholders. You'd have thought that if he [Alec Reed] had issues, he might have used the non-execs to address them."

The company's annual report for the year to end June shows Ms Echtle earned a total of £192,000, including a basic salary of £135,000, while Mr Doyle was paid a total of £116,000 in the year.