VEON Ltd’s (NASDAQ:VEON) Chief Leaves After Short Tenure

After a short stint at VEON Ltd (NASDAQ:VEON), Chief Executive Mr. Jean-Yves Charlier will be stepping down, having served 2.9 years at the company.

Mr. Charlier, age 54, was appointed as CEO of VEON on 01 April 2015, and has since taken the company’s market cap to US$4.64B, and sales to US$9.47B in the past year. VEON Ltd., through its subsidiaries, provides mobile and fixed-line telecommunications services. However, during Mr. Charlier’s final year, VEON faced some headwinds, resulting in underperformance relative to the industry. While US-based wireless telecom peers returned 12.67% and grew its bottom line by 5.09%, VEON reported -12.63% and -27.11%, respectively.

See our latest analysis for VEON

In the final year of service, Mr. Charlier received a total compensation of $8,374,579 comprising of $7,574,330 in cash incentives, including a base salary of $2,819,125, and $800,249 in non-cash incentives, such as option awards and restricted stock awards. Overall, Mr. Charlier’s remuneration doesn’t seem to be above the average publicly-listed, mid-cap company, indicating that VEON had not been overpaying its CEO.

NasdaqGS:VEON Income Statement Mar 28th 18
NasdaqGS:VEON Income Statement Mar 28th 18

VEON’s board, comprised of 10 directors chaired by Ms. Ursula Burns, has an optimal board tenure of 3.7 years, suggesting the board has a proven track record of governing VEON, without entrenched members in a stale environment. Furthermore, VEON’s average management tenure of 6.6 years and an average 54 years of age, signal an experienced executive leadership group in the wireless telcom industry. The team comprises of Mr. Trond Westlie, Group CFO & Member of Management Board with a tenure of 0.33 years, and Mr. Scott Dresser, Group General Counsel & Member of Management Board of 3.5 years.

Board Members Title Management Compensation (USD) Tenure (yrs) Age (yrs)
Julian Horn-Smith Member of the Supervisory Board $224,620 3.67 69
Augie Fabela Co-Founder and Chairman Emeritus 51
Ursula Burns Chairman of the Supervisory Board $2,217,201 0.67 58
Mikhail Fridman Member of the Supervisory Board $45,106 7.92 53
Alexey Reznikovich Member of Supervisory board $45,106 7.92 49
Jørn Jensen Member of the Supervisory Board $254,327 1.58 53
Stan Chudnovsky Member of the Supervisory Board $218,672 1.58 46
Andrei Gusev Member of the Supervisory Board $45,106 3.92 45
Gennady Gazin Member of the Supervisory Board $286,203 3.42 52
Gunnar Holt Member of the Supervisory Board $174,541 2.75 62

The 39,938-strong company saw a sell-off of company shares over the past 12 months, with a total number of shares unloaded by executives and management of 90,000,000 shares. Although insiders may divest their holdings in a company for many reasons including personal ones, on the other hand, a sell-down coinciding with a change in the top executive role could also indicate uncertainty over VEON’s outlook going forward.

Next Steps:

VEON’s change in its Chief Executive could be a catalyst to invest. I view this as an opportunity for two reasons: either the change in leadership is needed, which means Mr. Charlier’s departure is favorable for the business, or else the company is in a strong fundamental position, suggesting any drop in share price as a result of this news is not justified in the long run. To confirm whether VEON is a strong investment case, and if you should take advantage of the news of the CEO departure, there are three things you should look at:
  1. Future Outlook: What are well-informed industry analysts predicting for VEON’s future growth? This graph illustrates VEON’s forecasted financial based on a consensus of analyst estimates for you to gauge the current market sentiment.
  2. Valuation: What is VEON worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? This free intrinsic value infographic helps visualize whether VEON is currently mispriced by the market.
  3. Other Opportunities: Ultimately as an investor, you want to invest in fundamentally strong companies, which will continue to perform regardless of which top executives come and go. These high-performing companies are the stocks you may want to have in your portfolio.