Pressure mounts on long-term ASX CEOs to bow out

Ingenia boss Simon Owen. Brisbane. Picture: Tim Marsden

The announced departure of Dexus chief executive Darren Steinberg once again throws the spotlight on the tenure of Australian listed company leaders.

Mr Steinberg’s departure came after more than 11 years at the top job of the country’s largest office landlord, and follows other well regarded CEO opting to step down after a long period in the job, such as Transurban boss Scott Charlton, who resigned after 11 years running the toll road operator.

Such bosses bow out gracefully before there’s pressure for them to do so.

But the tenure of CEOs has become topical after the Qantas board was criticised for allowing Alan Joyce to run the airline for 14 years amid reports of recent poor customer service and operational performance at the national carrier.

Company founders or CEOs with major holdings, where investors are effectively buying shares in the business because they know their leaders have skin in the game, can be considered an exception.

But there are other ASX listed leaders where pressure could now be mounting for resignations.

In the real estate space, there’s recently been a number of resignations by long presiding CEOs, simply due to a broad changing of the guard.

Now the spotlight is on Simon Owen, the CEO of land lease communities operator Ingenia, which had three profit downgrades last year.

Mr Owen joined Ingenia as the CEO in 2009, which means he’s run the business for 14 years.

In resources, the attention turns to Amanda Lacaze at Lynas, who was initially credited for turning around the company and a critical component of its success.

Yet, some believe the time has come for a change after she was originally brought on to run the company in 2014.

In August, Lynas reported cost blowouts to $730m from $500m on its rare earths processing facility at Kalgoorlie.

Staying in resources, another name in focus is Paul Flynn at coal miner Whitehaven, who has been CEO for 10 years.

Shareholders rewarded his recent move to buy BHP’s coal mines, but there’s been a level of dissatisfaction from some about the performance of other acquisitions under his leadership.

The challenge for the Mark Vaile-led board is attracting top talent to a coal miner, with the commodity out of favour due to the transition to renewable energy.

Sonic Healthcare’s head Colin Goldschmidt has run the Australian listed radiology and pathology provider since 1993, and while the company’s performance is largely seen to be on track, it’s a long time for any executive to be at the top.

Also interesting to watch will be whether Fletcher Building boss Ross Taylor and Ramsay Health Care CEO Craig McNally survive within the next year.

Much of whether Mr Taylor, who has run Fletcher’s since 2017 departs, will depend on whether the building materials provider is liable to pay out more to repair leaking pipes installed in Western Australia housing from its Iplex business that it has already been estimated or provisioned for.

Fletcher’s denies claims that the products, rather than how they are installed, is at fault.

Also, some analysts are uncomfortable about its debt levels, and believe Fletcher Building may need to raise equity.

On Ramsay, there is still a fair bit of disappointment from investors that the board wasn’t able to consummate a deal with Kohlberg Kravis Roberts to buy the group, with the share price plummeting after its original $88 per share offer to about $50.

There’s pressure being applied for Mr McNally to unlock value and drive down debt through asset sales or a demerger of its European arm.

Typically, the general rule for Australian listed company chiefs is that they should stay in the job no more than five to seven years to ensure fresh ideas and strategies.

And succession planning is the role of a company’s directors.

Yet one of the challenges is identifying the right internal candidate to take over from a long presiding CEO.

If talented executives do not see any chance of a planned departure by their superior, they may seek promotions elsewhere.

Top ANZ executives, Michelle Jablko and Alexis George, both left the Shayne Elliott-run bank for CEO opportunities elsewhere, at Transurban and AMP respectively.

At Brambles, CEO Graham Chipchase has been in the top job since 2017, and recently chief financial officer Nessa O’Sullivan announced her departure, perhaps for that same reason.