The reverberations from the ASX’s failed attempt to replace the CHESS clearing and settlement system continue to play out. The ASX board has decided to strip former CEO Dominic Stevens of $2.6 million worth of long-term share rights, indicating that they have taken note of the market’s anger over the system’s failure.
In its remuneration report, the ASX board applied malus to all long-term variable rewards issued to Stevens and former deputy CEO Peter Hiom between 2018 and 2021. The share rights granted to Stevens over that period had a potential future value of $2.6 million.
Peter Hiom’s outstanding short-term variable rewards issued in 2019 and 2020 were also canceled, along with all 2022 STVRs issued to executives involved in the CHESS project. Furthermore, STVRs for all ASX executives were reduced in 2023, with executives connected to the CHESS debacle facing deeper cuts.
Interestingly, the pay of chief risk officer Hamish Treleaven, who has been in his role since 2017, actually increased thanks to a 17% raise in his base pay.
ASX CEO Helen Lofthouse is confident that the CHESS program is back on track. The “solution design” for the new system is scheduled to be completed by the December quarter, and a new advisory group chaired by former ASIC boss Alan Cameron has been established to allow industry input.
While the write-down for the CHESS disaster resulted in a 38% decline in statutory profit, underlying earnings only fell by 3.4% in a year when trading volumes were low due to investor concerns and a lack of IPOs.
Lofthouse hopes that both trends will reverse in 2024 with the decline in interest rates and inflation, and an increase in IPO activity. However, the market remains concerned about the company’s costs, which grew by 12.3% in 2023. Lofthouse believes that cost growth will range between 12% and 15% in 2024, but the significant drop in the group’s share price over the past year suggests that investors need reassurance.