Iress share price drops 9% on news of CEO departure

Businessman walking down staircase with suitcase, at sunrise

Image source: Getty Images

The Iress Ltd (ASX: IRE) share price is down 9.3% to $10.66 in early trading today after the company announced the departure of its CEO and preliminary 1H FY22 results.

In its statement, Iress reaffirmed its FY22 full-year profit guidance based on preliminary unaudited results for the first half.

Iress is a technology company providing software to the financial services industry. Its software is used by more than 10,000 businesses and 500,000 users globally.

Iress share price dives despite reaffirmed guidance

Iress said its 1H FY22 segment profit is expected to be $80.3 million. This is up 6% on the prior comparative period (pcp).

The company reaffirmed its guidance range of $177 million to $183 million for the full year in FY22.

Iress will announce its 1H FY22 results on 18 August during the upcoming earnings season.

New Iress CEO is the former head of PEXA

Today Iress announced the appointment of Marcus Price as its new managing director and CEO, effective from 3 October. He will begin as a non-executive director with the company today.

Price will replace current CEO Andrew Walsh, who is retiring after 21 years with the company and 13 as CEO. He will remain with Iress as a consultant from 3 October until the end of January 2023.

Iress said Price has more than 25 years of experience “leading transformative financial services and technology businesses”.

Price was previously the founding CEO of PEXA Group Ltd (ASX: PXA), which is Australia’s first digital property exchange. He held this role for more than 10 years.

Price has also held senior positions with National Australia Bank Ltd (ASX: NAB) and the Boston Consulting Group, which is one of the world’s largest management consulting firms.

How much will the new Iress CEO get paid?

Essentially, Price’s remuneration will be the same as the current CEO, according to the statement.

Price’s base salary will be $712,736 (including superannuation) plus 13,865 equity rights for FY22 (prorated). The grant of these equity rights will be subject to Iress shareholder approval in or around September.

Price has agreed to a 30% reduction in base salary and equity rights (compared with the current CEO remuneration package) from 3 October 2022 through to 31 December 2024.

In exchange, Iress will issue Price with a one-off $13 strike price options package, converting into Iress shares with a fair value of $1,372,470 exercisable in two tranches from February 2026 and from February 2027.

Iress will also ask shareholders to approve the same performance rights package they approved for Walsh in May 2022. Price will not be eligible for performance rights until 2024.

Iress said: “The cost impact to the company will be neutral, with the fair value of the options equating to the 30% reduction in remuneration agreed by Mr Price.”

What did Iress management say?

Roger Sharp, Chair of Iress, made the following comments:

Andrew has been an outstanding leader and steward of Iress. Since taking over as CEO in 2009, he has been instrumental in building Iress into a highly innovative market leader with a global footprint.

Marcus is ideally placed to steer Iress on the next phase of its journey. He brings tremendous experience in financial services and technology businesses with a demonstrated track record in creating shareholder value.

What did the departing and incoming Iress CEOs say?

Walsh said, “… with the company in such a strong position, I feel the time is right to pursue new opportunities. I am proud to have seen Iress through a period of substantial transformation and growth into what is today a successful global technology business and market leader.”

Price said, “I am certainly looking forward to working with the Iress team as we execute on the 2025 strategy presented to the market last year, including continuing to evolve Iress’ operational model and transition to a platform-based architecture. In addition, we will explore further horizons and ambitions for the business.”

Iress extends share buyback program

Last week, Iress announced an extension of its existing on-market share buyback program.

Iress announced the buyback in July 2021. Back then, Iress was planning to purchase up to $100 million shares in the period to 28 July 2022.

To date, Iress has purchased $70 million in shares. The company said the buyback period “will now continue until the buyback program is completed”.

The Iress share price is down 18.6% in 2022 so far, including this morning’s losses.