TIDMSGE
RNS Number : 3697Z
Sage Group PLC
31 August 2018
Directorate Change
The Sage Group plc (the Group) announces today that the Board
and Stephen Kelly, Chief Executive Officer, have come to an
agreement and Stephen has stepped down as a director and CEO. He
will remain available to the Group until he leaves on 31(st) May
2019. The Board has initiated a process to find a new CEO.
The Board has today appointed Steve Hare, Chief Financial
Officer, to the additional post of Chief Operating Officer on an
interim basis. In his position as CFO and interim COO, Steve Hare
will have full executive authority to run the business until the
appointment of the new CEO.
The Group remains focused on completing its evolution to a SaaS
business, driven by Sage Business Cloud and providing outstanding
customer experience, with greater prioritisation on accelerating
the operational execution required to realise the significant
opportunity available to Sage.
In seeking a new CEO, the Board is particularly focused on
finding an executive practiced in embedding sustainable processes
at scale for the next phase of the Sage journey to capture the
significant opportunities ahead.
Donald Brydon, Chairman, said: "Stephen has much to be proud of
in the very heavy lifting he has led as the Group is transformed.
He energised the Group, drove change with relentless focus on
customers, and under his leadership the strategy to become a
leading SaaS business has been defined. The Board remains fully
supportive of the overall strategy. We wish Stephen well in the
next phase of his life."
Stephen Kelly said: "I joined Sage four years ago and am
immensely proud of the extraordinary change that I have had the
privilege to lead. I joined a fragmented organisation with minimal
presence in the cloud. The major cultural transformation has
created Sage Business Cloud which has now grown to GBP386m of
annualised recurring revenue (ARR) from a standing start and has
driven total shareholder return for Sage of over twice that of the
FTSE100 during my tenure. I am proud of my role in positioning Sage
as a champion of entrepreneurs and a voice of business heroes. In
addition, the Sage Foundation is living proof that companies can
make a difference across their communities. It has been an honour
to build a world-class management team, to serve my colleagues and
inspire in them my overriding passion of customer obsession. I look
forward to Sage's continued growth and success."
The Group continues to trade in line with previous full year
FY18 guidance of around 7% organic revenue growth and around 27.5%
organic operating margin. As indicated when the Group provided its
Q3 trading update earlier this month, achieving guidance depends on
closing a number of Enterprise Management opportunities in
September. The Group will announce its FY18 full year results on 21
November 2018.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014. The person responsible for
making this announcement on behalf of the Group is Miranda Craig
(Company Secretary).
Enquiries
The Sage Group plc: +44(0) 191 294 3457
Lauren Wholley, Investor Relations
Amy Lawson, Corporate PR
FTI Consulting: +44(0) 20 3727 1000
Charles Palmer
Appendix
CEO stepping down
The following information is provided pursuant to section
430(2B) of the Companies Act 2006. The financial terms below have
been agreed with Mr Kelly in connection with his announced
departure and are in line with the Company's Remuneration Policy
which was approved by the shareholders at the 2016 AGM.
The following arrangements will apply in respect of Mr Kelly's
notice period:
-- Mr Kelly's 12 month notice period commences immediately. Mr
Kelly will spend the first nine months of his notice period on
garden leave.
-- During his garden leave Mr Kelly will be available to be
consulted at the Board's discretion.
-- Mr Kelly's termination date will be 31 May 2019. Following
this date he will receive a payment in lieu of notice, calculated
by reference to the base salary, pension contributions and car
allowance he would have received during the remaining three months
of his notice period. Such payment will be made in instalments and
will be subject to deductions for mitigation.
Other terms agreed with Mr Kelly, which were the subject of
careful consideration by the remuneration committee, are as
follows:
-- Mr Kelly will remain eligible to receive a bonus in respect
of the 2017/18 financial year, subject to the remuneration
committee's determination as to the achievement of any applicable
financial and personal performance conditions. Any bonus awarded to
Mr Kelly will be pro-rated by reference to the period of the bonus
year which has elapsed by August 2018.
-- Mr Kelly will not be eligible for a bonus in respect of the 2018/19 financial year.
-- Mr Kelly will be treated as a good leaver in respect of his
existing awards under the Company's Performance Share Plan (PSP),
which will vest on their normal vesting dates subject to
satisfaction of the applicable performance conditions. Mr Kelly's
PSP awards will be pro-rated by reference to the proportion of the
applicable performance period that has elapsed by 31 May 2019.
-- Mr Kelly will be treated as a good leaver in respect of his
existing awards under the Company's Deferred Bonus Plan (DBP),
which will vest on their normal vesting dates and will not be
subject to time pro-rating.
Information on the vesting of the PSP and DBP awards will be
disclosed in the relevant directors' remuneration reports following
vesting. Any awards which are currently subject to malus and
clawback provisions set out in the relevant plan rules will
continue to be subject to such provisions.
The table below sets out the relevant number of shares under
each of Mr Kelly's PSP and DBP awards, along with date of grant and
date of vesting. In the case of the PSP, vesting (and therefore
future value) is subject to the achievement of applicable
stretching performance conditions. The DBP awards relate to
deferred bonuses already earned for previous performance years.
Number of shares
Type of award Grant date under award Vesting date
PSP award
PSP 12/01/2015 213,421 12/01/2021
---------- ---------------- ------------
PSP 02/03/2016 327,909 02/03/2019
---------- ---------------- ------------
PSP 14/12/2016 323,224 14/12/2019
---------- ---------------- ------------
PSP 07/12/2017 266,272 07/12/2020
---------- ---------------- ------------
DBP awards
DBP 14/12/2016 36,503 14/12/2018
---------- ---------------- ------------
DBP 07/12/2017 8,520 07/12/2019
---------- ---------------- ------------
The Company will make a contribution of GBP11,000 (plus VAT)
towards Mr Kelly's legal fees incurred in connection with the
arrangements relating to his departure.
Interim COO
In connection with the appointment of Steve Hare to the role of
interim COO, the following changes will be made to his terms until
the new CEO is appointed:
-- A 'step-up' allowance of GBP186,750 per annum will be paid in
addition to his current base salary of GBP522,000 for the duration
of his appointment as interim CEO, providing a new interim annual
salary of GBP708,750.
-- His benefits, pension allowance and all other employment terms will remain unchanged.
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END
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