Embattled listed Australian funds management group, Magellan, has moved to shore-up key staff under a triple-pronged retention plan revealed last week.
In addition to a double-whammy bonus payment program – falling due in September 2024 and 2025 – the manager will ease terms on staff loans and issue 10 million options set to vest in just over two years.
The Magellan staff options will stay live until mid-April 2027 at a strike price of A$35, more than double the current share value that has fallen from a 12-month high of A$56 following a string of mandate losses and senior executive changes.
Founder and chief investment officer, Hamish Douglass, stepped down from his executive roles in February citing a “medical leave of absence”. Magellan chief, Brett Cairns, resigned in December last year with CFO, Kirsten Morton, assuming the role in an interim capacity.
Magellan co-founder, Chris Mackay, returned to the business after a nine-year absence to take up the CIO duties while another former senior employee, Nikki Thomas, resurfaced as a portfolio manager.
Douglass also quit the Magellan board in mid-March, triggering a search for an “additional independent director”, the company said in a release.
Magellan funds under management (FUM) dropped below A$70 billion in March, almost A$50 billion off a peak of about A$116 billion recorded last December.
Late in December the firm lost its biggest institutional client, a A$23 billion mandate with UK advisory giant St James Place, with further significant institutional and retail outflows in the ensuing months.
“Magellan has experienced net outflows of approximately $5.0 billion since the most recent FUM update on 25 February 2022, which comprised net institutional outflows of $4.7 billion and net retail outflows of $0.3 billion,” the company said in a March 14 statement. “In addition, since 25 February 2022, Magellan has received notifications of intention to redeem of $1.0 billion…”
As well as looking to lock-in employees with an attractive remuneration package, Magellan is also wooing investors via a new options offer due to launch on April 14.
The non-renounceable deal will see all investors offered the right to purchase one Magellan share for every eight they currently own, at a strike price of A$35.
Magellan chair, Hamish McLennan, said in a release: “We believe the bonus issue of options at no cost to shareholders, and the $35 exercise price and 5 year term, provides a potential source of value for our shareholders.”
The Magellan options, due to expire in April 2027, are expected to list on the ASX later this month.
Despite its recent woes, Magellan reported a net profit after tax of more than A$250 million in the last half of 2021. According to a group statement, the staff retention arrangements have not changed the expected business costs for the current financial year of between $125 million to A$130 million.
Magellan has been a popular global equities choice for NZ investors and advisers while also winning some institutional support including a mandate with the Generate KiwiSaver scheme.