Of all the ASX 200 shares on the share market, it's probably a fair bet to say that investors in Magellan Financial Group Ltd (ASX: MFG) shares would be amongst the most unhappy today.
These investors have had to watch the Magellan share price lose almost half of its capital over 2022 alone. The Magellan share price is also down by a depressing 67% or so over the past 12 months. And the company is down a whopping 85% from the all-time highs of over $70 a share that we saw back in early 2020.
Today, the Magellan share price has closed at $10.72. That tells you all you need to know.
There are a few things that went wrong at Magellan over the past two or three years. But these can be summed up by the chronic underperformance of its funds.
Not to mention the undignified departure of its co-founder and former stock-picking star Hamish Douglass. And we can't forget the loss of several high-profile investing mandates from institutional clients.
So it might be perhaps a bit galling for some investors in Magellan to hear that the company is seeking a pay rise for its top brass in 2022.
According to an ASX 'chairman's letter' released on Monday, Magellan informed its shareholders that the company is undertaking a "board renewal program".
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Mo money, less problems for Magellan directors?
The company has called an extraordinary general meeting (EGM) for 14 December next month to seek shareholder approval for this program, mainly the price tag. Here's what Magellan's management had to say:
The purpose of this EGM is to seek shareholder approval to increase the maximum aggregate remuneration payable to non-executive Directors of Magellan.
This approval is an important step in the Board renewal program to ensure that Magellan can attract and retain high calibre non-executive Directors, with the right experience and skills to support Magellan's new strategic direction, whilst providing sufficient headroom to facilitate our target Board size.
The Board recently engaged an independent adviser to provide benchmarking data on non-executive Director remuneration and was advised that the current fees paid to Magellan's non-executive Directors are significantly below those of market peers.
Having regard to benchmarking data, as well as other factors including the additional roles and complexity of the work being undertaken by the non-executive Directors, the Board considers it is necessary to increase Director remuneration in line with market rates and feedback from the search process.
With the search for additional non-executive Directors in progress, the Board believes this approval will assist with facilitating an efficient and effective Board renewal program.
It's not an insignificant pay rise that is being proposed either. On December 14, shareholders will vote on raising "the maximum aggregate remuneration that may be paid to all non–executive Directors in any financial year" by $1 million. This will lift the total remuneration available for all of the directors combined from $750,000 to $1.75 million.
No doubt some investors may find this objectionable. Considering the recent woes of the Magellan share price and all. But we shall have to wait until 14 December to see if the board can convince stakeholders to stump up the extra cash.
Editor's note: A previous version of this article suggested Magellan non-executive directors were seeking an additional $1 million each. This has since been corrected to $1 million in aggregate spread among all Magellan non-executive directors.
