Formica’s exit as both co-CEO and from the board is effective immediately. Dick Weil has become sole CEO, the group revealed in its Q2 results.
The board said Formica (pictured) and Weil were both highly qualified, but they considered US-based Weil the most appropriate candidate to take Janus Henderson “to the next level”. Janus Henderson chairman Richard Gillingwater said Weil has successfully led companies through challenge and change.
Global head of distribution Phil Wagstaff will also exit the business.
Formica’s severance pay will be reflected in the third quarter results, the group said. He was due to stay on three years after the merger, but it is rumoured he could now head up Australian insurer AMP.
In Q2, adjusted net income was $149.9m up 4% from $143.6m in Q1 and 6% from $139.8m in the same period last year.
Transatlantic shift
Tilney managing director Jason Hollands said Weil’s appointment suggests the centre of gravity for the business is now firmly planted in the US. The company has a dual listing in the US and Australia, where Formica hails from.
Hollands said he was not surprised by the move to a more cost-effective solution. The merger, which created a firm with $320bn assets under management, completed in Q2 2017. AUM sat at $370.1bn in the Q2 results with net outflows of $2.7bn and currency movements offsetting positive investment performance.
The group has achieved annualised cost savings of $109m for the period ended 30 June 2018 and expects this to reach $125m annually three years post merger.
Willis Owen head of personal investing Adrian Lowcock did not view Formica’s earlier than expected departure as a negative, stating management structure needs to evolve to reflect the changing shape of the business.
“The merger of the two businesses has progressed well and were ahead of expectations which gives greater scope to review the arrangement,” Lowcock said.
Spotlight on Standard Life Aberdeen
The sudden drop of the co-CEO arrangement has sharpened focus on Standard Life Aberdeen, which adopted the same leadership structure following its own merger.
Aberdeen’s Martin Gilbert and Standard Life’s Keith Skeoch became co-chief executives of the combined group when it officially merged in August 2017, creating a firm with £670bn AUM.
“I wouldn’t expect this to be a long-term arrangement either,” Lowcock said.
“The dual CEO role is rarely a successful one as it is hard to split the responsibilities down the line and often comes around as a way to get a merger through without upsetting important parties. Usually after a merger it becomes clear that it was never a merger of equals and is almost always a takeover from one business of another.”
However, he added that such situations are determined by the individuals involved. “If they can create a successful partnership then there is no reason to break it up.”
A Standard Life Aberdeen spokesperson told Portfolio Adviser in a statement: “Martin and Keith are working well together and are focused on managing and building the business.”
