Perpetual CEO, David Deverall, did the right thing by his employer yesterday in signalling his decision to stand down next March.
The announcement gives the Sydney-based funds manager the chance to find a new CEO, either internally or externally.
A former Macquarie Bank senior executive, Mr Deverall will almost certainly leave sooner once the company’s board, led by chairman Bob Savage, is able to find a replacement.
For Mr Savage there’s an element of de ja vu in yesterday’s announcement: it was only last Friday that Mr Savage was announcing the shock departure of David Jones CEO, Mark McInnes, for ‘conduct unbecoming’.
Yesterday’s announcement from Perpetual had none of the drama of the DJs announcement. While it was mundane in comparison, it did take the market by surprise.
So Perpetual shares ended down 50c, or 1.6%, in trading yesterday at $29.90.
That was on par with the 1.6% fall in the broader market.
Mr Deverall joined Perpetual from Macquarie in September 2003 and seems to have realised that there’s more to life than running a company in the volatile funds management industry, especially in current market conditions.
Perpetual rode the pre-2007 credit boom well but, like so many fund managers, has struggled since the credit crunch started and then the recession swept across the globe (but only brushed Australia and China).
The company has found 2010 tough going as investors have taken a more conservative stance on risk and reward.
Cash and fixed interest seem to be as interesting for many investors as share price gains and imputed dividends.
The last six months have seen Perpetual’s shares slide around 25% as the market has slowed and then fallen on doubts about growth, Europe, China and the resources tax.
But while that’s in tune with the fall in the prices of many shares, it’s far more than the 8.5% drop in the market since January, indicating there are some investor unease with Perpetual.
Mr Deverall said yesterday that he thought it was “time for a change” after seven years.
“After seven years and having steered Perpetual through the global financial crisis I now believe it is time for a change. Perpetual has a strong balance sheet and one of the best brands in the financial services market,” he said.
“I will work closely with the senior team to ensure the transition is as seamless as possible.”
Mr Savage said the board had understood Mr Deverall’s decision to depart but had accepted it with “regret”. "We thank David for his contribution over the last seven years,” he said.
Mr Savage said in the statement that Korn Ferry had been appointed to search for the best possible person to succeed Mr Deverall. “This means a robust process is being put in place to consider candidates.
"The process will be overseen by the Nominations Committee of the Board and led by the Chairman."
Mr Savage added, “Perpetual is well regarded in the market and I affirm the guidance in my letter to shareholders of 27 May 2010".
One thing is certain; there was no succession plan, unlike at David Jones where a replacement for the departing Mark McInnes was able to be announced at the same time as the shock resignation.
