ALS CEO Forfeits AU$6 million Bonus Amid Investor Backlash

Highlights:

• CEO Forfeits AU$6 million Bonus: Former ALS CEO Raj Naran gave up long-term bonus shares worth up to AU$6 million in response to investor backlash over executive pay, securing a shortened non-compete period instead.
• Solid Financial Performance Amid Challenges: Despite a 1.3% decline in underlying profit to AU$316.5 million and a significant statutory profit drop due to write-downs, ALS met market expectations, demonstrating resilience.
• Strategic Diversification and Growth: Under new CEO Malcolm Deane, ALS is focusing on strengthening its regional presence in the pharmaceuticals sector and maintaining robust performance in environment and food testing, with a cautious outlook on economic conditions.

CEO Relinquishes Bonus

Raj Naran, the former CEO of ALS Limited (ASX: ALQ), has agreed to relinquish up to $6 million in potential long-term bonuses following investor backlash over executive pay. Naran, who resigned last year due to family illness, forfeited his bonus shares in exchange for a shortened non-compete period. This decision came after ALS faced criticism from shareholders, resulting in a first strike against its remuneration report.

Financial Performance

Despite economic challenges, ALS reported a "solid" underlying profit of $316.5 million, a 1.3% decline for the year ending March 31. However, statutory profit plummeted to $12.9 million, a 95.6% decrease, primarily due to write-downs related to its European drug testing business, Nuvisan, and restructuring charges.

Business Overview

Founded in 1863 as a soap factory, ALS has grown into a global testing giant with over 19,000 employees across 70 countries. The company’s services range from testing gold samples to water quality. The recent annual report revealed that underlying earnings in ALS' commodities division fell due to a slowdown in mining exploration, though there were signs of improvement in mineral sample flow.

New Leadership and Future Outlook

Malcolm Deane, the new CEO with a compensation package of $2.88 million, noted that while margins in the life sciences division were squeezed, the environment and food testing sectors performed well. He expressed confidence in ALS' resilience and adaptability, emphasizing the company's strategic diversification efforts. ALS aims to strengthen its regional presence in pharmaceuticals without extensive global expansion.

Market Reaction

Following the announcement, ALS shares rose by 69¢ to $14.48. Analysts from UBS noted that ALS' underlying results met market expectations, underscoring the company's stability amidst fluctuating economic conditions.

Conclusion

ALS continues to navigate challenges with strategic adjustments in leadership and business focus, aiming for sustained growth and stability in diverse sectors.

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