Magellan CEO departs abruptly after FUM slide

Magellan Financial Group has ousted its chief executive, David George, from his position and the board effective immediately and chair Andrew Formica will take an executive role until the company can find a replacement.

Friday, October 27th 2023, 6:02AM

Formica became chair just 10 weeks ago on Aug 17.

George was appointed in May last year, recruited from his previous job as deputy chief investment officer at the Future Fund, the Australian counterpart of the New Zealand Superannuation Fund, and joined Magellan in July last year.

He will “remain available” until Dec 31, and will then be paid in lieu for the balance of six months notice, Magellan said in a statement to the Australian Stock Exchange.

George had pledged to build Magellan's funds under management to A$100 billion within five years.

Magellan shares have dropped from A$8.81 on Oct 5 to as low as A$6.06 on Wednesday, after the company announced it suffered net outflows of A$2 billion in September, including net retail outflows of A$0.3 billion and net institutional outflows of A$1.7 billion.

Its funds under management at Sept 29 fell to A$35 billion from A$39 billion at Aug 31 with its global equities portfolio dropping to A$15.3 billion from A$18.6 billion over the month.

That followed an A$0.3 billion outflow in August and an A$0.4 billion outflow in July.

The shares were at A$17.25 at the beginning of May last year.

“The board, in consultation with David, believe it is time to refocus leadership, which will accelerate the progress made to date,” Formica said in the statement.

“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 [be] appointed,” the statement said.

“Our immediate focus is to ensuring we retain, attract and appropriately incentivise our talent to drive performance excellence.”

George was signed on with a salary of A$1.8 million and a signing bonus of A$600,000.

Formica will be paid A$1.35 million per annum while executive chair and the company has agreed to replace additional incentives Formica has from his previous employment – he is the former CEO of Janus Henderson.

“If Mr Formica is detrimentally impacted, he will be granted a cash replacement for incentives that he will give up. If lapsed, thee will vest up to the following amounts,” of A$715,010 in March 2024, A$574,470 in March 2025 and A$666.254 in March 2026 unless has resigned “or been summarily dismissed.”

If Formica leaves the company and doesn't return to the board, he will be subject to a 12-month non-compete and non-solicitation restraint, Magellan said.

Tags: Magellan