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Schroders has launched a search for a successor to its chief executive, Peter Harrison, who is preparing to retire as head of the UK’s largest asset manager after eight years.
He FTSE 100 Group Harrison confirmed he would step down in a market announcement on Wednesday following a Financial Times report, adding that he “anticipated an orderly transition during 2025.” The shares closed down almost 2 per cent at 366.6 pence.
Schroders, whose founding family is its largest shareholder and which has £750.6bn in assets under management, has hired headhunter Russell Reynolds to work on “a comprehensive and extensive global search”, according to two people familiar with the matter.
Possible internal candidates to replace Harrison include CFO Richard Oldfield, who arrived from PwC in October; the company’s global chief investment officer, Johanna Kyrklund; Georg Wunderlin, global head of private assets; and Meagen Burnett, group operations director.
Harrison, one of the longest-serving financial services bosses in the FTSE 100, has led Schroders since two months before Britain voted to leave the EU; a decision that altered London’s status as an investment center for Europe.
It has tried to offset the decline of the company’s traditional business by moving into faster-growing areas, such as private markets, acquire a majority stake at Greencoat Capital, one of Europe’s largest renewable infrastructure managers, and expanding into wealth management and its line of business providing outsourced investment managers and liability-based investments to pension funds.
These three growth areas now make up more than a half of its assets under management, and its contribution to net operating income increased from 31 percent in 2016 to 48 percent last year.
But critics said Harrison could have used Schroders’ stable share structure and cash reserves to be more radical in capitalizing on opportunities to reshape the business, suggesting the deals he struck were too small to turn the dial. So far, they have failed to boost Schroders’ share price or profits.
Harrison has been paid more than £50m since 2016, but gave up some of his deferred income and donated some of his bonus to charity during the pandemic. He will be paid £6.3m in 2023.
The group’s share price is down 40 per cent since its peak in September 2021 and has fallen around 15 per cent during Harrison’s tenure as chief executive. Schroders recorded £618.1m pre-tax profit in 2016 – its first year in the top job – and last year pre-tax profit was £487.6m.
The drop in share price reflects how the business models of active managers globally have changed. being under pressure from the rise of cheaper passive investing and a shift in investor demand from public to private markets.
British equity-focused players have also had to deal with the fallout from a decades-long shift by UK pension funds from holding shares in their home market, depriving trustees of of a key revenue stream.
The Schroder family owns 44.1 percent of the asset manager and two members of the board of directors have been linked to the family for more than four decades. Harrison is credited with leading a long-awaited revision two years ago of what he called the company’s “anachronistic” ownership structure, to ensure that shareholders’ economic interest in the group coincided with their voting rights. Each of the company’s non-voting shares (one-quarter of the total outstanding) was converted into one voting common share.
“It has been an immense privilege to serve as CEO,” Harrison, who will remain a director of the company during the succession process, said in a statement. “I care deeply about the company and our people. “I believe now is the right time for the Board to begin searching for my successor and to do so in a transparent manner with our stakeholders.”
Harrison began his career at Schroders and went on to hold roles at other asset managers including Newton Investment Management, JPMorgan Asset Management and Deutsche Asset Management. He was running boutique RWC Partners when he was chosen to rejoin Schroders as global head of equities in March 2013, three years later replacing his Long-serving boss Michael Dobson as chief executive.