17 Oct Sandon seeking to dump John Eales from Magellan Financial Board over remuneration furore
Source: The Australian
By: Chris Herde
There is a push for former Wallabies Capital John Eales to be dumped as a non-executive director of embattled global funds giant Magellan Financial Group with activist investor Sandon Capital saying it would vote against his re-election.
The ASX-listed company’s Annual General Meeting is on November 8 and in a letter to new Magellan chairman Andrew Formica, Sandon managing director Gabriel Radzyminski cited concerns over Mr Eales performance as chair of the remuneration committee.
“(He) therefore must be held accountable for what we consider failings in Magellan’s approach to remuneration,” he said in the letter.
In August Magellan posted a worse-than-expected 52 per cent drop in full year profit to $182.7m on the back of continued fund outflows.
The company has been in a downward spiral since the shock departure of founder and reputed equity-guru Hamish Douglass last year and since then funds under management has slumped from $100bn-plus to $39.2bn by the end of July.
To address the slump Magellan completed a Board shuffle reshuffle including the appointment of new CEO David George.
Mr Eales who joined the Board in 2017 and Hamish McLennan – who is also the chairman of the Australian Rugby Union and the chair of REA Group – was appointed in 2016 are the longest serving directors at Magellan.
Mr Radzyminski said they intended to vote for the election and re-election of the other directors because they should provide for opinions not anchored to Magellan’s past.
“If these directors are elected, a majority of directors will, for all intents and purposes, form a `new guard’,” he said.
The `old guard’, which should be held accountable for Magellan’s predicament, will be in a minority and their influence will be significantly, and rightly, diminished.”
Mr Radzyminski said the transition from being a founder-led business to an agent-led one was the biggest challenge facing Magellan.
“This transition, if successfully achieved, will set the foundations upon which Magellan’s
other challenges can be overcome,” he said.
“On the day the founder departed Magellan, the responsibility for this transition fell to the directors in office. Shareholders may have been somewhat forgiving of any oversights or omissions during the immediate aftermath of the founder’s departure in early 2022.
“Now, more than a year later, we are disappointed in the performance of those directors.
“We expected the 2023 Remuneration Report, issued more than a year after the appointment of a new CEO, to be far more conventional. Yet it wasn’t – it still carried all the hallmarks of the `old’ Magellan.”
Mr Radzyminski said Mr George’s base annual salary of $1.8m was “staggering”, not only for its size but in comparison to his peers.
“We are concerned with the lack of a clear connection between shareholder outcomes and CEO remuneration, more than a year after the CEO has been appointed,” he said.
“We believe there is a timely imperative for Magellan to devise a long-term incentive plan to be put to shareholders for approval.
“Such a plan will provide confidence that Magellan staff have appropriate and necessary alignment. It will also provide shareholders with a clear understanding of the behaviours the Board seeks to encourage.”
Magellan Financial Group shares closed up 6 cents to $6.61.
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