SkyCity executive exodus: analysts remain perplexed by shock moves

Analysts and some major shareholders remain perplexed by SkyCity Entertainment’s executive exodus that caught the market by surprise.

The casino company yesterday revealed chief executive Graham Stephens would be replaced immediately by chief operating officer Michael Ahearne, chief financial officer Rob Hamilton was leaving in February and chief marketing officer Liza McNally was also leaving in March.

Jarden analysts Adrian Allbon and Luan Nguyen said in a research note today that the speed of the CEO transition against the backdrop of “strong trading momentum” was a key surprise factor.

They noted execution of remaining capital projects and current strategy as a key downside risk to the company’s share price along with Covid related shutdowns and economic conditions.

The three sudden departures appeared to come without warning less than a month after the company’s annual meeting last month.

Forsyth Barr analyst Chelsea Leadbetter while SkyCity made it clear at an analyst briefing an internal process has been under way for some time, the sudden departure of Stephens “was very surprising to us.”

Other professional investors who hold shares in the duel-listed NZX and ASX-listed business were also left shaking their heads today, not wanting to talk much, but declaring they had no knowledge of what had happened. They could not throw any light on what was announced to the market by the company.

Leadbetter indicated one comfort in the shock news: the new CEO’s background, ability and experience.

“Taking aside the questions this raises, we view Michael Ahearne as a high-quality appointment,” she said.

The Irish executive has substantial gaming expertise of about 20 years, a track record of execution at SkyCity both pre and during Covid-19 and was known to the market.

“While this was unexpected, we view new CEO Michael Ahearne as a business as
usual appointment, de-risking the transition, and expect little change in near-term priorities,” Leadbetter said.

SkyCity Chairman Rob Campbell said yesterday he appreciated the move might appear sudden, however Stephens’ role had been under discussion for months.

“While it’s a quick change, from the board’s point of view it’s very much about stability,” Campbell stressed yesterday.

“This business has been through a lot in the last couple of years and we’re very concerned we have a good stable transition. While it seems like a short time period to external people, it reinforces stability within the business,” Campbell said.

Stephens told the Herald in 2017 that living in New Zealand has been a long-time ambition, he says.

The Zimbabwe-born Stephens left the much larger Johannesburg-headquartered Sun International – a casino/entertainment/hotel business – to take over from Nigel Morrison on May 1, 2017.

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