Magellan vulnerable to takeover as board hit with first strike

afr.com:

Magellan Financial shareholders have registered a large protest vote against the fund manager’s board, with the company’s new chairman, Andrew Formica, urging investors to focus on the company’s strong balance sheet and its plans for the future.

Mr Formica said he had listened to the feedback of shareholders after 58 per cent of investors voted against the remuneration report at the company’s annual meeting in Sydney on Wednesday. As more than 25 per cent of shareholders rejected the remuneration report, the Magellan board will face re-election if there is a similar outcome at next year’s annual general meeting.

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

“We accept and acknowledge that shareholders are disappointed with our remuneration framework and want to assure shareholders we have taken on your feedback,” he said.

Four directors, including Mr Formica, were elected to the board, while former Australian rugby union captain John Eales was re-elected with 62.4 per cent of the vote.

Magellan’s shareholders in attendance showed restraint, despite having endured another torrid year of staff departures, client redemptions and a further 20 per cent decline in the share price. That followed a 60 per cent fall last year. On Wednesday, shares in Magellan closed 0.6 per cent higher to $6.98.

Mr Formica has been installed as a temporary chief executive after the departure of former Future Fund executive David George, and is leading the search for a replacement. Only 12 months ago, Mr George unveiled his plan to restore Magellan’s funds under management to $100 billion.

The new chairman says Magellan’s strategy has not changed, although he