CSL and ASX CEO departures signal leadership shake-up across corporate Australia amid AI pressure
Four blue-chip CEOs announced their departures this week as rapid advances in AI intensify pressure to deliver shareholder returns.
A slew of chief executive departures from blue-chip ASX businesses punctuated a week of whipsawing share prices as corporate Australia fronts the advance of technologies linked to artificial intelligence.
On Monday, the market’s largest healthcare business, CSL, said its chief executive, Paul McKenzie, would leave immediately. On Wednesday, the stock exchange operator, the ASX, said its chief executive, Helen Lofthouse, would leave in May, while construction giant Lendlease and financial services blue-chip AMP also announced plans for their top leaders to depart.
“It looks like the CSL CEO got sacked,” said fund manager Emanuel Datt, of Datt Capital.
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By continuing you agree to our Terms and Privacy Policy.“CSL is a healthcare business, but it shows how AI arguments are valid for most businesses. CSL runs high fixed overheads, so a high headcount and high R&D (research and development) costs. But in the US now AI is helping find new therapeutic treatments by using the power of datasets and healthcare businesses are taking out costs with AI. So for businesses of scale especially, you need to be on top of this.”
CSL’s board is unhappy
CSL’s board dumped Mr McKenzie after a horror year for the biotech giant saw the stock plunge 42 per cent and erase around $47 billion in shareholder wealth.
The North American executive is being replaced by Victorian, Gordon Naylor, as the Melbourne-founded company looks for a permanent replacement under another Victorian, chairman Brian McNamee.
“We have made excellent progress on the transformation, but we are impatient,” Mr McNamee said this week. “Shareholders cannot be happy with the performance because the board isn’t happy.”
Australia’s stock exchange operator, the ASX Ltd, has also been under intense investor and regulatory pressure to get its operating platforms updated and 100 per cent reliable for its financial partner stakeholders. Its board is yet to announce a replacement for Ms Lofthouse, but said it would undertake a global search at the same time as it considers internal candidates.
“ASX’s attempts at new technologies just haven’t quite worked out,” said Mr Datt. “There probably wasn’t enough foresight at the board and senior executive level to scope out what was needed. It’s a great business, but having discipline is important. If you’re running any business from a car dealership to a logistics provider, your number one aim is to run it efficiently, you can’t just have an open cheque book.”
ASX shares have slumped from $68.30 this time last year to $54.44 on Friday, as investors reacted to its total costs ballooning 20 per cent to $264.3 million over the six months to December 31. Much of the cost blowout is linked to the demands of financial services regulator ASIC and financial stability guardian the RBA that it get its house in order.
CEO qualities
Mr Datt said high CEO turnover among blue-chip Australian corporates isn’t necessarily a negative, as it will allow for a younger generation of leaders to come through.
“The number one characteristic for a CEO is being able to lead people,” he said.
“We might see more tech-savvy leaders, but ultimately most aren’t doing the strategic tech work, which is still be the remit of the chief technology officer or equivalent.”
At CSL the 62-year-old Mr Naylor is replacing the 60-year-old Mr McKenzie.
While a 2021 survey by executive recruitment consultancy, Heidrick & Struggles, showed the typical S&P/ASX 200 CEO is a 55-year-old male, with around 70 per cent internal appointments after climbing the career ladder in their specialist vocation.
“For investors, the key CEO qualities are still financial discipline and being able to make tough decisions,” said Mr Datt.
“If you look where it goes wrong for companies, some CEOs don’t have an ability to kill projects off. While for others, it’s not unusual for them to not want to hear bad news. But bad news can happen and that’s why you need a good board. So, turnover at the top end of town is a good thing as it shows boards are taking accountability seriously, rather than the business as usual that mightn’t be good for a company.”
This week’s CEO turnover comes as Australia’s half-year profit reporting season reaches its halfway mark in February, with speculation of more changes at the top over the rest of the month.
