In another blow to the much-reduced ASX-listed funds management group, Magellan, chief executive, David George, exited last week less than 18 months into the tough turnaround job.
Magellan executive chair, Andrew Formica, said in a release that the board “in consultation with David, believe it is time to refocus leadership which will accelerate the progress made to date”.
George took the Magellan reins in May 2022 after the surprise exit of co-founder and chief investment officer, Hamish Douglass, shook the once unassailable global equities favourite of Australasian advisers.
From a peak of about A$116 billion near the end of 2021, the manager has seen funds under management shrivel to A$35 billion at the latest count as both institutional and retail investors fled.
Global funds management veteran, Formica will take over operational control of the firm until a new CEO is appointed. He joined as Magellan chair this August following his most recent stint as chief of UK funds management group, Jupiter, following nine years as co-CEO of Janus Henderson.
Formica also doused hopes of a quick return to the A$100 billion club as Magellan looked to rebuild its fortunes with the first move a bid to keep staff.
However, he said the manager would “continue to explore organic and inorganic growth opportunities”
“Our immediate focus is on ensuring we retain, attract and appropriately incentivise our talent to drive performance excellence,” he said in the release ahead of an almost A$8 million tweak to the Magellan staff retention scheme.
Under the revised incentive program, Magellan will write off $7.7 million of loans extended to employees to buy shares in the company for those who stick around until September 2025.
“These payments will be partially offset by a reduction in previously announced retention payments of approximately $1.3 million to certain Key Management Personnel,” Magellan told investors in an ASX statement.
Total Magellan projected operational costs for the 2024 financial year will rise from the previous $97.5 million to $102.5 million following the incentive update.
“We are also committed to the development of our new employee accountability and alignment model by 30 June 2024,” Formica said, “which will provide employees with short term and long-term incentives that are aligned to delivering positive returns and shareholder outcomes.”
The Magellan share price dropped about 25 per cent on the news, falling to about A$6.20 from A$8.80. At its peak in 2020, Magellan was trading at more than A$66.