Magellan to bring in Sophia Rahmani from Maple-Brown Abbott as next CEO

After reporting a 24 per cent lift in net profit after tax (NPAT) to $104.1 million for the December half despite a large drop in funds under management (FUM), Magellan Financial Group (ASX: MFG) is shaking off its run of bad luck with a new leadership plan that will see seasoned investment exec Sophia Rahmani transition to the role of CEO within a year.

The announcement comes within four months of the shock departure of former CEO David George, which saw chairman Andrew Formica add "executive" to his title - a responsibility he will retain until Rahmani becomes CEO.

Rahmani is currently the CEO and managing director of Sydney-based boutique fund manager Maple-Brown Abbott, and has held executive positions at Janus Henderson Investors in Australia and Singapore, and Macquarie Group (ASX: MQG) in Australia and the US.

"Having carefully reviewed Magellan’s leadership structure and completed a comprehensive CEO search process, we are delighted to welcome Sophia to the business and consider the transitionary leadership structure will best position Sophia and the business for success for this new phase," says Magellan's deputy chairman and lead independent director Hamish McLennan.

"It allows us to build on recent progress to reset the business for growth, while ensuring we maintain the stability Andrew’s appointment has provided. We thank Andrew for agreeing to continue as executive chairman during this period."

Formica says he is pleased to continue in an executive capacity to "build upon recent progress the business has made" and turn his attention to "attractive opportunities for growth whilst supporting Sophia in her new role and beyond".

"I am truly excited to be working with Sophia given the strategic, commercial, and operational expertise she has cultivated over her career," he says.

"I will remain executive chair for an interim period to ensure we maintain continuity and stability, focusing my attention on Magellan’s strategic development, while Sophia focuses on our funds management business."

Rahmani will start the leadership transition as managing director of Magellan's main operating subsidiary, Magellan Asset Management Limited, effective in May 2024.

"I am excited to be joining Magellan, a fund manager I have admired for its focus on clients and strong historical investment performance. I look forward to working with Andrew and the Magellan team to deliver excellence in all aspects of the business," she says.

Rahmani will earn a base salary of $850,000 plus a sign-on bonus of $700,000 and a $2.5 million worth of MFG shares, as part of the company's long-term incentives plan. She will also be entitled to other short- and long-term incentive payments.

When David George was appointed as CEO in 2022, he had a base salary of $1.8 million and a signing bonus of $600,000, as well as incentives. In FY23 his total remuneration was $3.4 million.

The group's decline in funds under management continued in the first half, falling 31 per cent year-on-year to $36.9 billion, but profit improved and shareholders will be offered a 50 per cent franked interim dividend of 29.4 cents per share (cps).

"Over 1H24 we have restored corporate stability, resolved a number of legacy issues and are gaining momentum on our strategic priorities," says Formica.

"With a new executive leadership structure in place, and a number of legacy issues behind us, including having addressed the Employee Share Purchase Plan loans and the uncertainty around our Magellan Global Fund (Closed Class) (MGF), I am confident the business is in a strong position to rebuild and grow.

"In parallel with these important steps, we have made progress on our strategic agenda, including announcing today an enhanced and refocused US distribution platform, disclosing plans to launch a new product – the Magellan Unconstrained Fund – to retail investors, progressing development of our Employee Equity Plan, and seeing a positive after-tax contribution from our associate investments.

"These initiatives and progress demonstrate that we are moving forward with pace at our strategic objective of becoming the asset manager of choice in the Australian market across a diversified offering. This includes continuing to assess strategic growth opportunities that are value accretive to the business and our shareholders."