United Rentals Board Fires CFO, President and Founder Milne

Sept. 1, 2005
GREENWICH, Conn. United Rentals' board of directors last month fired president and chief financial officer John Milne because of his refusal to answer

GREENWICH, Conn. — United Rentals' board of directors last month fired president and chief financial officer John Milne because of his refusal to answer questions posed to him by a special committee of United's board in regard to an SEC inquiry. United announced in July that Milne had failed to perform his duties and that the board gave him 30 days to respond to the board's questions.

At that time, a spokesman for Milne said his lawyers advised him it would be “careless” to meet with the board's special committee to discuss complex matters that occurred several years ago.

The board also requested that Milne resign as a director of the company. According to documents filed in August with the SEC, United said Milne is not entitled to severance payments because he is being terminated for cause, although he is entitled to be paid any accrued base salary, unreimbursed expenses and accrued vacation. His employment agreement provides for him to receive an annual incentive bonus for 2004, up to $825,000. Milne will forfeit 275,000 performance units under the company's long-term incentive plan and 120,000 stock units awarded under the company's 2001 senior stock plan. United will repurchase 507,251 shares of common stock and warrants to purchase stock from Milne for $7.1 million.

United said it will repurchase the stock at a discounted price of $11.62 per share and book a pretax charge of $5 million in the third quarter as a result of the payment.

A spokesman for Milne said Milne does not agree with the decision. “In his view, the unwillingness of the board's Special Committee to agree to mutually acceptable terms precipitated his decision not to submit to an interview,” the spokesman said. “This does not constitute grounds for termination with cause. The SEC inquiry of United Rentals that commenced approximately a year ago involves a broad range of complex matters, most of which date back to a time prior to Mr. Milne's appointment as CFO in late 2002.”

The statement adds that Milne has been assisting the company for almost a year in carrying out the inquiry. The SEC has inquired into short-term equipment sale-leaseback transactions. United reported that the accounting for some of its transactions in 2000, 2001 and 2002 was incorrect. It added that restatements for 2000 through 2003, as well as the first nine months of 2004, will be issued to correct expense booking problems related to its self-insurance reserve. The company also revealed earlier this year that a material weakness associated with estimating reserves for workers' compensation claims was found and that adequate measures have been taken to remedy the control weakness.

Although Milne has served as United Rental's president since 2001 and chief financial officer since 2002, Milne will most likely best be remembered for his role as United's chief acquisitions officer. As CEO of a company that acquired 250 companies, Milne and the acquisition team he headed visited hundreds of rental companies, traveling to every major and many minor metropolitan areas throughout North America seeking acquisition targets. As one of the founders of United Rentals, and also serving as a director and vice chairman, Milne played a major role in mapping the company's roll-up strategy of seeking platform acquisition companies, focusing on larger, multi-branch companies in order to quickly obtain a major market presence in a given city or region.

United's most significant acquisition was that of U.S. Rentals in 1998, then the industry's third largest rental company. United's acquisition of U.S. catapulted it into the position of the industry's largest rental company, a status it has never relinquished.

Milne also was a founder of United Waste Systems, where he held a number of senior executive positions from 1990 to 1997, including that of vice chairman.

United Rentals is No. 1 on the RER 100.