Can the new CEO at iSentia Group Ltd (ASX:ISD) turn things around?

iSentia Group Ltd (ASX: ISD) announced some leadership changes today with the appointment of Ed Harrison as CEO and the resignation of its CFO James Orlando.

Executive Chairman Doug Snedden, who will revert back to his non-executive Chairman role said that the new CEO was a good fit for the company given his, “strong track record in sales, digital media and product development, and leadership of businesses in transformation”.

The company will need that experience as it is undergoing a transformation program following the disastrous King Content acquisition and a loss of clients which led to a decline in revenue and a significant drop in its share price.

With a share price that is down 67% over the last year, iSentia is part of an unenviable list of ASX companies whose shares have under performed.

The list includes Blue Sky Alternative Investments Ltd (ASX: BLA) (down 85%), Retail Food Group Limited (ASX: RFG) (down 90%) and Myer Holdings Ltd (ASX: MYR) (down 53%).

With that in mind, shareholders will be wondering, can the new CEO turn things around?


I think a good starting point is to understand what incentives are in place for the new CEO.

Warren Buffett’s long-time business partner Charlie Munger once said, “show me the incentive and I will show you the outcome”.

The table below provides a summary of how the CEO will be compensated:

Description Amount  Conditions
Base annual remuneration $676,000 Continuous employment
Sign on equity $676,000 of equity 2 years of employment
Variable Reward Target of $540,800 and maximum $845,000 Based on total shareholder returns & compound annual growth of the company’s earnings per share.

Foolish takeaway

Personally, I would prefer for the CEO to have a much higher portion of their income based on results and then couple that with an even higher upside if results are delivered.

While iSentia’s PE ratio of 8 looks attractive, I won’t be jumping in based on the numbers alone. The underlying business continues to faces headwinds with an ever changing media landscape.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can find Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has recommended iSentia Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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