Star Sydney turnaround CEO turns away to lead Smartgroup

A turnaround executive who was brought in to lead the embattled Star Sydney resort and casino last year has accepted a new job within just nine months of the appointment.

Former Commonwealth Bank (ASX: CBA) executive Scott Wharton was appointed to Star Sydney just months before the group was hit with a $100 million fine stemming from findings of the casino's malpractices unveiled through the high-profile Bell Review, which took place before his tenure.

At the time Ben Heap, who retired last week as the last of The Star's old guard board to exit, said Wharton was appointed for his expertise in delivering "significant transformation working closely with regulators, together with his commercial skills and experience managing complex businesses".

However, his time at The Star will end up being less than a year as today it was announced Wharton would be heading up salary packaging and novated leases company Smartgroup (ASX: SIQ) starting on 17 July.

The news follows an announcement on 23 February that Smartgroup's current managing director and chief executive officer Tim Looi had advised the board of his intention to retire, having been with the company since 2009 and in the top executive role since 2020.

Smartgroup chair Michael Carapiet said Looi has been an integral part of the company's journey over more than a decade.

"We are very grateful for his service and his contributions and we wish him well into the future," Carapiet said.

The Smartgroup board expects the company will benefit from Wharton's extensive experience in various senior leadership, transformation and operational roles within large ASX-listed and financial services companies, also including Citigroup.

"We are very pleased to have secured the services of an exceptional and highly credentialed executive in Scott, with his experience in operational and transformation roles within financial services organisations," Carapiet said.

“Scott will bring a strong track record of driving performance and change to lead Smartgroup and realise the significant growth potential in our business.”

Wharton said he was excited to lead Smartgroup and build on its success.

"Smartgroup can play a growing role as Australian consumers face increasing cost of living pressures, providing seamless salary packaging and car leasing services. Smartgroup’s established capabilities in areas like payroll, workforce optimisation and fleet management position the company to play a bigger role in helping clients transform their businesses," the incoming CEO said.

“The company has an impressive focus on customer service and has made good progress in streamlining and digitising operations. This has created a loyal client base and strong foundations for further innovation and growth.

"I am committed to working with the Smartgroup team to deliver sustainable and growing returns for our shareholders by ensuring the resilience of current operations, lifting performance, and accelerating digitisation and innovation.”

Wharton will receive a fixed salary of $850,000 per annum inclusive of superannuation entitlements, and a one-off sign-in bonus of $150,000 within one month of starting the job. Under his short term incentives plan, he could receive an additional $552,500 annually, while he will also receive around $1.1 million in share options as part of a long-term incentive.

Smartgroup has been in a state of slow share price recovery since October, up 28 per cent at its current price of $6.42.

This is still well below the $10.35 per share takeover offer made in September 2021 from a consortium comprising TPG Global LLC and Potentia Capital, the latter having recently made headlines for its takeover of Nitro Software (ASX: NTO) and its attempts to acquire Tyro Payments (ASX: TYR).

Smartgroup reports on a calendar year basis and in 2022 its revenue was up slightly at $224.7 million, with NPATA of $61.2 million at the top end of guidance range although down 12 per cent year-on-year. In February Looi noted there had been ongoing challenges for new vehicle supply issues, in addition to the pressures of increasing interest rates and rising costs.

Costs also rose because delayed vehicle delivery timeframes were increasing the need for credit re-approval and customer engagement. 

Looi said the company was seeing strong leasing leads though, with a new lease vehicle order pipeline currently standing at $19 million - $15 million higher than historical levels. After the Electric Car Discount Policy was introduced in November 2022, Smartgroup recorded a 270 per cent increase in novated leasing quotes for EVs in the December quarter.