Fry out of Mercedes (updated)

15/02/2010

Nick Fry has resigned from the board of Mercedes Grand Prix which is now dominated by directors representing the team's 45% shareholder Daimler including its motorsport boss Norbert Haug.

Pitpass' business editor, Chris Sylt, discovered the changes in company documentation (pdf file) which reveals that Fry's appointment as a director was terminated on 26 January 2010. He has not been reappointed. The documents also show the resignations of the majority of the team's former management under its guise of Brawn GP.

Ross Brawn remains a director of the team but its lawyer Caroline McGrory has also resigned as a director along with its former finance director Nigel Kerr and two other directors John Marsden and Gordon Blair. They were replaced by two other Daimler directors, Joachim Schmidt and Thomas Weber, as well as David Forbes and Mohamed Badawy Al Husseiny who represent the Aabar investment fund which owns 30% of the team.

Despite leaving the board of the company which runs the team Fry is still its chief executive which is an extremely uncommon situation. Although Mercedes says that "it is not a legal requirement for a CEO to be a statutory director under English Company law," even the car manufacturer adds that "it is unusual."

The simple reason for this is that only the directors are able to vote on proposals at board meetings and these are where some of the most important decisions about the team will be made. As chief executive, Fry should be the most important person in the company's leadership but he is not even guaranteed a vote at board meetings due to him not holding a board position. Sylt says he has never come across such a situation in his ten years of covering thousands of companies in areas ranging from sport and leisure to transport and technology. It remains to be seen whether this arrangement will be the best way for Mercedes to manage its investment in F1.

The departure of the majority of Brawn's former management indicates that they no longer hold equity in the team with the remaining 25% believed to he held by Ross Brawn himself. Company documents do not yet confirm this however, they do reveal how the shares were split between the management before the team was acquired by Mercedes and Aabar.

According to the documents, Brawn himself held 54% of the team with 31% in Fry's hands, 8% held by Kerr, 3% by McGrory, a further 3% by Marsden and 1% in Gordon Blair's name. If the team was sold for $75m (£47.9m), as has been widely reported, this would have given Brawn a £25.9m payout (if he fully sold his stake before reinvesting) with Fry getting £14.9m, Kerr receiving £3.8m, £1.4m going to McGrory, the same to Marsden and £470,000 to Blair.