The share price at the North East’s only FTSE 100 company fell by more than 5% after the chief executive announced plans to retire.
Newcastle-headquartered software giant Sage Group said that Guy Berruyer has indicated to the board his wish to retire from the firm, and from executive life, no later than March 31 2015, prompting a search for a new leader.
The board said Mr Berruyer would leave the firm in a strong position, and understood his reasons for retiring, having worked at the company – a global leader in software for accountancy, payroll, HR and more – for 17 years.
Mr Berruyer said: “Being chief executive officer of Sage is a role I have relished, leading a group of people I am very proud of.
“I am extremely pleased with all we have achieved since I joined the company 17 years ago and I’m satisfied that Sage is well positioned for an exciting future.
“But life is about making choices, and at 63 years old I still have many things I want to achieve besides my executive career.
“As Sage progresses successfully towards our strategic milestones for 2015, I have decided that the time is right to begin to hand over the reins to a new chief executive.”
Sage results - at a glance
Interim dividend per share
Within hours of the announcement the firm was leading the FTSE 100 fallers, with the price falling by 23.3p by mid-afternoon – 5.55%.
The share price fall came despite the company unveiling a strong set of financial results for the six months ended March 31 2014, further proof that the business has convinced the sceptic investors who were unsure of the firm’s decision two years ago to halt further acquisitions in favour of focusing on organic growth.
The company saw organic revenue rise to £657m in the period, an increase of 4.9% on the comparable period in 2013, while organic operating profit also rose, by 8.9% to £180m. The interim dividend per share is also up 6.2% to 4.12p.
The firm said the growth in software subscription revenue has been the main driver behind a 7% increase in organic recurring revenue, which now accounts for 72% of group sales.
Mr Berruyer said: “This is a good set of results, with the increase in organic recurring revenue growth demonstrating that the strategy is working well.
“Sage is changing, with greater focus, investment in technology to address customer needs and the move to subscription all delivering results.
“We remain confident that the good first half performance will be carried through to the full year, and of achieving our target of 6% organic revenue growth in 2015.”
Financial arrangements for the outgoing chief executive – which the firm said will adhere to the rules of all relevant incentive schemes and be within the Remuneration Policy – will be reported when he steps down. In March it was announced that Berruyer and a small team of other Sage directors and senior executives would earn shares worth millions of pounds if they hit performance targets – but those targets are set for 2017, two years after the outgoing chief’s proposed departure.
Nine members of the executive committee were granted a highly lucrative incentive to spur on the firm’s fortunes, in the form of awards over ordinary shares in Sage Group under the firm’s Performance Share Plan.
Mr Berruyer was to acquire 464,894 shares, worth £1.85m at this afternoon’s price of 398p per share.