The Magellan share price has caved 50% so far this year. Are directors seriously asking for a pay rise?

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”.

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” from $750,000 to $1.75 million. That’s an extra million apiece.

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.

The post The Magellan share price has caved 50% so far this year. Are directors seriously asking for a pay rise? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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