The Magellan Financial Group Ltd (ASX: MFG) share price is down 4% after yet another CEO departs.
Magellan used to be one of the largest fund managers in Australia, but it has significantly declined since then.
Magellan Financial Group share price
CEO departs
David George is stepping down from his role as CEO and Managing Director of Magellan, and will cease his role as director of the board effective today. He will remain available until 31 December 2023 for a handover, at which point he will paid in lieu of the balance of six months’ notice.
Magellan said that Mr George contributed to stabilising and improving the core funds management business, “defining a strategy to diversify the business and establishing new products and enhancing client solutions.”
Chairman Andrew Formica will become Executive Chairman to “maintain stability” and ensure that Magellan continues to deliver on its strategic objectives and aid improved performance. Ultimately, hopefully, the changes can help the Magellan share price.
Why has this change happened?
New executive Chair Formica said:
The Board, in consultation with David, believe it is time to refocus leadership which will accelerate the progress made to date. The Board remains focused on the delivery of exceptional investment performance for our clients and are well positioned to continue to explore organic and inorganic growth opportunities. I am personally committed to the task of leading Magellan until such time that a new CEO can appointed.
Our immediate focus is on ensuring we retain, attract, and appropriately incentivise our talent to drive performance excellence. An important step in achieving this is to address the existing Employee Share Purchase Plan (ESPP) Loans and we are pleased to today announce that additional retention payments will be made to close out the ESPP Loan balances for the majority of staff by September 2025.
Additional payments totaling $7.7 million is proposed to be made to current employees with outstanding ESPP loans to be applied against outstanding loan balances.
These payments will be partially offset by a reduction in previously announced retention payments of approximately $1.3 million to certain key management personnel.
The impact of these additional retention payments on Magellan’s expense base is expected to be approximately $2.5 million in FY24. This has increased its cost guidance for the FY24 funds management business to $97.5 million to $102.5 million.
Final thoughts on the Magellan share price
It has fallen such a long way. The best way for Magellan to stop money leaving the fund manager is to deliver outperformance, but there’s no guarantee of it being able to deliver that in the short-term or the long-term.
Unless Magellan changes how it invests, I don’t think the fund manager is attractive long-term choice at this stage. Better investment performance is what will retain and attract funds under management (FUM).
