ODYSSEY MARINE EXPLORATION HAS IMPLEMENTED THE CHANGES IN ITS SENIOR MANAGEMENT TEAM ANNOUNCED AT THE SAME TIME AS IT POSTED A $4 MILLION QUARTERLY LOSS. CHANGES INCLUDE THE REPLACEMENT OF ODYSSEY FOUNDER AND CEO GREG STEMM WHO IS DISPATCHED UPSTAIRS TO BE CHAIRMAN OF THE BOARD CONCENTRATING ON MINING OCEAN MINERALS.
THE PIPELINE LOOKS AT THE IMPLICATIONS OF AND POSSIBLE REASONING BEHIND, THE CHANGES.
In a move which could be seen as an end to the swashbuckling, archaeologist riling, attempt to create a hybrid commercial model combining treasure hunting with what many see as a veneer of archaeology, Odyssey Marine Exploration [OMEX] founder Greg Stemm has left his post as Chief Executive Officer to move round to the head of the Board Room table in Tampa as Chair of the OMEX Board of Directors. Mr Stemm left his post on 1 October 2014 and has been replaced by Mark Gordon, previously Odyssey’s Chief Operating Officer [http://ir.odysseymarine.com/releasedetail.cfm?ReleaseID=874240]. The move coincides with the company appearing to attempt to reposition itself, moving away from the commercial exploitation of historic shipwrecks in an attempt to staunch the hemorrhage of cash brought about by the abortive HMS Sussex, HMS Gloucester and HMS Victory 1744 projects. The ultimate reason for the move appears to be the multi million dollar humiliation of the so called “Black Swan” salvage from the Spanish frigate Nuestra Senora de las Mercedes. A salvage which the US Courts found was “contrary to Law” and which many observers and critics of Odyssey’s corporate style and business model cite as the financial and reputational disaster which finally proved to the world that Odyssey’s attempting to marry treasure hunting, underwater archaeology and a neo-liberal free market business model was a short cut to an ethical and financial shipwreck of an entirely different kind. Instead Odyssey claims it will be concentrating in future on modern commodity wrecks where the issues of ownership. legality and ethics are supposedly more clear cut and coupled with a move into undersea mining, driven through Odyssey’s controversial mining subsidiary Oceanica.
“Dropping the entrepreneurial founder”
[With apologies to Sir John Tenniel]
The Odyssey Press Release which first announced the change quoted Mr Stemm as saying “There comes a time in a company’s history when the entrepreneurial founder needs to step aside and allow a seasoned management team to run the day-to-day operations of a business,” and he promises to undertake a strategic role concentrating on the development of the companies fledgling ocean minerals business.
Mr Stemm added “”With a steady stream of gold coming up from the SS Central America , the Oceanica project moving forward rapidly and the Victory project on the horizon, I am comfortable that we will be able to finish out the year with a series of positive catalysts that should please our shareholders, and allow Mark to step into the role of CEO with significant momentum.”
However, the announcement came in tandem with the company’s most recent quarterly report, filed with the United States Securities and Exchange Commission [SEC] and covering the second quarter of 2014. This showed that the financial outlook for Odyssey remains extremely fragile with the company reporting a quarterly loss of $4 million and sufficient cash to fund only a further two months of operations without further dilutions or major injections of cash, which have indeed come in the form of a secured loan “up to an aggregate amount of $10.0 million” which was announced on 18 August 2014. From a UK point of view, far from being on the horizon, the HMS Victory 1744 project remains hove to in a fog of controversy and an investigation by the Marine Management Organisation over allegations of unlicenced activity on the site in 2012 which could yet result in criminal charges under the UK Marine and Coastal Access Act. Meanwhile the mining of off shore mineral deposits, while it has been proposed for over fifty years, remains of unproven practicality, and is highly controversial on environmental grounds, opposed as it is by many fishing organisations, as well as marine conservation and Green groups.
In a report published in July 2013 the international environmental campaigning group Greenpeace stated its position.
“Greenpeace demands that no seabed mining applications are granted, and that no exploration or exploitation takes place, unless and until the full range of marine habitats, biodiversity and ecosystem functions are adequately protected…”
Whatever happens to Odyssey in the future, the public withdrawal of Mr Stemm from the day-to-day running of the company he co-founded with John Morris in 1995 is certainly the end of an era. Mr Stemm has been very much the public face of Odyssey, not least in its series of reality documentary/infomercials “Treasure Quest” and “Billion Dollar Wreck Hunt” shown in the UK on the Discovery Channel and Channel 5.
Critics of the company point out that the reality the TV series did not show were Odyssey’s consistent multi-million dollar losses over many years, the regular dilution of the company share value and a series of catastrophic controversies culminating in 2012 in the humiliating loss of a court case brought by the Government of Spain over Odyssey’s removal of seventeen tons of silver from the Spanish Frigate Nuestra Senora de las Mercedes, which the US Courts found was “contrary to Law”. The Mercedes case saw Odyssey’s corporate culture of risk taking and gaming of the legal process castigated by Florida Judge Stephen Merryday. As a result it may well be that Odyssey’s directors, the company’s major financial backers in various Hedge Funds and ultimately the Banks supplying the succession of high interest loans which some analysts say are the life belt keeping the company afloat, have finally taken the view that Mr Stemm has taken one risk too many. In so doing he has lost too many people too much money and left the company too vulnerable to attack on grounds of its management culture and lack of archaeological ethics to be seen to be left in charge as CEO.
Odyssey watchers also suggest that with the promotion of an Odyssey insider closely associated with the Stemm regime, Mr Gordon, to replace Mr Stemm as CEO, it remains to be seen whether the change is anything more than a cosmetic exercise in public relations. After all, as Mr Stemm once told journalist John Collapinto of the New Yorker, ” “I understand promotion. I understand how to put things in writing that people react to.” This impression of a game of musical chairs at the top of Odyssey is strengthened by the appointment of another Odyssey insider, intimately connected with the period when Mr Stemm was CEO, John D Longley Junior, to replace Mr Gordon as Chief Operating Officer. In the Form 8K which announced Mr Longley’s appointment on 8 October 2014, Mr Longley is described as having “orchestrated the development of Odyssey’s global distribution network for shipwreck coins and collectibles…”. A C.V which will do nothing to convince the archaeological community that the Stemm/Odyssey Leopard is likely to change its treasure hunting spots any time soon.