Quindell Plc is up 24% in trading today after announcing the appointment of Richard Rose as non-executive Chairman and Jim Sutcliffe as Strategy Director and Deputy Chairman. That puts Quindell up 166% for the year, though the bar was set fairly low after a disastrous 2014. The stock, at a three-month high, is still only about a sixth of the highs it hit last April.

A string of good news for Quindell Plc

This is the third promising development for Quindell since the beginning of the year. First it announced that it was in talks to sell off one of its operating divisions, which wouldn’t normally be a positive sign for a firm that’s supposed to be growing but shows that management is finally taking its cash position seriously and is more interested in stabilizing than acquiring. Then sentiment got another boost after Toscafund Asset Management increased its position in Quindell to 5.4%, an important show of confidence for one of the most shorted companies of 2014.

Quindell also said that it had £13 million operating cash inflows for 2H2014 before exceptional items, leaving the company with a gross cash position of £69 million at the end of the year and £52 million in drawn banking facilities. Even if the exceptional items pull cash flow negative for the half, it still looks like the company is getting its cash burn under control.

Quindell Plc QPP

Quindell Plc – New appointments come with conflicts

Rose and Sutcliffe bring a lot of experience to the table, but the terms of their appointment raises the question of whether Quindell has really put its corporate governance issues behind it.

“If the legal services group thinks offering retro goodies worth as much as £66m to Richard Rose and Jim Sutcliffe can herald a new era of plain dealing, it is wrong,” writes Jonathan Guthrie for The Financial Times.

He points out that under the UK’s Combined Code non-executive board members aren’t supposed to get incentive payments like the ones being offered to Rose and Sutcliffe, and since Sutcliffe is the chairman of the standards committee of the Financial Reporting Council – which writes the combined code – everyone involved in the deal must have been aware that it would be frowned upon (the Combined Code isn’t entirely mandatory). On top of that, Quindell has started working with BaxterBruce Limited, a consultancy firm of which Sutcliffe is a director. It must be a sign of how low expectations are that investors have taken the latest conflicts of interest in stride.

The stock still would need to appreciate much more since Gotham City Research issued a bearish report on the firm. Gotham is not backing down either and tweeted the following today.