Is SkyCity Entertainment Group Limited-Ord (ASX:SKC) CEO Nigel Morrison worth $100 million?
That's how much investors slashed from the company's market capitalisation yesterday after the announcement that he would be leaving the company at the end of April.
Morrison might be flattered. The 4% fall implies investors have less confidence in the company's future without him at the top. It's certainly better than the alternative; more confidence with him gone.
That would be hard to believe though given the stability Morrison has brought to the gaming and entertainment company over the last eight years. Morrison took over in 2008, at the very apex of the financial meltdown, just as capital flows around the world started to seize and consumers started running for cover.
Since then SkyCity has seen its share price rise from $2.80 in May 2008 to $4.29 today under Morrison's lead, a rise of 53%, while the S&P/ASX 200 (Index: ^AXJO) (ASX:XJO) is down 14%.
What now for investors?
Yesterday's share price drop is less likely to be attributed to Morrison himself, and more likely in response to the uncertainty of a permanent replacement.
For investors the timing makes good sense. SkyCity's immediate future is well set out towards developing the expansion in Auckland and building the New Zealand International Convention Centre (NZICC), so there is time to find a suitable candidate to facilitate the next phase of the company's growth.
Should you buy?
I have long been a fan of SkyCity's investment proposition. The company has an enviable market position and in Auckland – the company's biggest operation – has strengthened its revenue streams by building an entertainment hub under Morrison's leadership.
The company pays an attractive dividend and is reasonably priced, particularly compared to Star Entertainment Group Ltd (ASX:SGR). If the share price fell further I would be tempted to increase my current holding in the company.
