Former Wallabies skipper almost crash tackled off Magellan board

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Ex-Wallabies captain John Eales has narrowly survived a vote on his tenure as director of former high-flying fund manager Magellan as shareholders issued the company a stinging rebuke, voting against its remuneration report following two years of fund outflows and share price decline.

At Magellan’s annual meeting on Wednesday, more than 58 per cent of proxy votes were against the company’s remuneration report and nearly 38 per cent came in against the re-election of Eales, who was a key oversight for the report.

Magellan non-executive director John Eales was re-elected by a narrow margin at the company’s AGM on Wednesday.

While the vote on executive pay was non-binding, the proxy result implied a total vote well above the 25 per cent threshold required to constitute a “first strike”, which occurs when more than a quarter of shareholders vote against a company’s remuneration report. If there is a vote of 25 per cent or more against the remuneration report next year, it will trigger a separate vote on whether to spill the board.

The result comes following a troubled period in which the company’s share price tumbled due to investment underperformance and departures from senior management, including high-profile stock picker and founder Hamish Douglass and a former chief executive.

More recently in October, another chief executive, David George, left after just nine months in the role. The company’s latest update showed its total funds under management had dropped to $35 billion in September. The company had $61.4 billion in funds under management in June, and $115 billion at its height in mid-2021.

Magellan chairman Andrew Formica, who was appointed in July, said George’s departure was “a necessary change agreed by David and the board as we start to focus more promptly on our forward growth agenda”.

Formica said the company had added expertise in areas of investment management, technology, private markets and acquisitions in recent times, but that it was important to ask Eales to remain on the board to retain “historical corporate knowledge”.

In a letter leading up to the annual meeting, activist investor Sandon Capital had said it would vote against the re-election of the former rugby union star, citing opposition to the group’s pay policies.

On Wednesday, Eales survived the vote with 60 per cent of shareholders voting in favour of his re-election. Other directors Deborah Page, Cathy Kovacs and David Dixon received more than 97.5 per cent of votes for their re-elections to the board. About 82 per cent of shareholders voted in favour of Formica’s appointment to the board.

Formica said Eales had contributed a great deal to the business in his capacity as chair of the remuneration and nominations committee, including “driving the changes to the non exec director fee pool last year, which has allowed Magellan to attract the high quality new non exec directors that have been put up today”.

Magellan non-executive director Hamish McLennan and chairman Andrew Formica at the company’s AGM on Wednesday.Credit: Dominic Lorrimer

As attention turns to the company’s recovery, Formica said Magellan’s turnaround “will take time”, but that they were making progress on finding a new chief executive. “I’m very pleased with the candidate list that we’ve had, and we’re actively pursuing those as quickly as we can,” he said.

Asked about how the Magellan would stem its institutional outflows, Formica said he expected to see inflows improve over time if the fund manager could deliver sustained investment performance.

“Unfortunately, since the changes to our global investment team, driven by key personnel departures in that area, many of the consultants who supported us have recommended to their clients to review their holdings,” he said. “The other side of this is inflows and attracting new assets under management which will come through selling our strategies, including our newest strategies to existing clients, but also getting in front of new clients in different markets.”

Shares in Magellan rose 0.8 per cent to $7 each at about 1pm AEDT.

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