Outgoing NZX boss Tim Bennett took on a challenging role, but the firm's performance under his watch - particularly its lagging share price - has been a big disappointment, market insiders say.
Bennett will leave the company on December 31, a few months short of the five-year term envisaged when he replaced Mark Weldon at the helm in May 2012.
Chairman James Miller said the company wanted to ensure an "orderly succession" and a worldwide search had begun for a new chief executive.
Bennett's tenure coincided with a bull run in equity markets and a flurry of new NZX listings, including those that took place as part of the Government's partial privatisation programme for state-owned enterprises such as Meridian Energy and Genesis Energy.
Bennett overhauled the firm's strategy, including through growing its offering of financial derivatives and restructuring the company's agri division.
The business also expanded into funds management through the acquisitions of SuperLife and Apteryx.
But the company's earnings performance has failed to meet market expectations and its shares have significantly underperformed the wider market.
NZX shares have fallen roughly 18 per cent since May 2012, to recently trade down 2.9 per cent at $1.02, while the S&P/NZX 50 index has more than doubled in value over the same period.
Salt Funds Management managing director Matt Goodson said NZX, in theory, should have "strongly outperformed" in recent years given the "remarkable boom we have seen in the New Zealand listed market".
"Instead it has underperformed badly," Goodson said.
He said Bennett had inherited a company suffering from under-investment and legacy issues such as the long-running and costly dispute with the sellers of the Clear Grain Exchange, which NZX acquired in 2009.
"A balanced view [of the CEO's performance] would have to look at all of those elements," said Goodson, whose firm has a small shareholding in NZX.
On NZX's outlook, he said much of its restructuring had been completed but the company could come under pressure on listing and trading fees.
"It'll be interesting to see if those fees can be sustained."
Harbour Asset Management managing director Andrew Bascand said NZX's poor share price performance reflected a downturn in the company's earnings expectations.
What's astonishing about [the lower-than-expected earnings], in my opinion, is the equity market in that time frame has gone up by 16 per cent per annum.
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In 2012 the market was expecting annual earnings before interest, tax, depreciation and amortisation (ebitda) of around $34 million by the 2016 financial year, he said.
Today, NZX warned that costs associated with the agri business restructuring and CEO transition meant full-year ebitda will be towards the lower end of its previously disclosed guidance range of $22.5m to $26.5m.
"What's astonishing about [the lower-than-expected earnings], in my opinion, is the equity market in that time frame has gone up by 16 per cent per annum," said Bascand, whose firm doesn't hold an active position in NZX.
"They've had a huge bull market in the New Zealand equity market, which they ought to have benefited from quite significantly."
Bascand noted that some of the challenges had been out of Bennett's control, including costs associated with major regulatory changes and the Clear Grain Exchange litigation.
"But in a bull market there just should have been more earnings leverage to the equity market going up," he said.
Bascand also questioned whether NZX's move into funds management was the right move.
"I personally don't think stock exchanges should own fund managers ... because it sets up a potential conflict of interest," he said.
Bascand added, however, that the range of exchange traded funds (ETFs) NZX now offered was a positive development for the market.
"I would be delighted to be proven wrong - I think SuperLife could be a very good business."
Since Tim took the helm in 2012, he has successfully repositioned NZX's strategic direction, ensuring NZX can take advantage of future growth opportunities in the markets.
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Grant Williamson, of sharebrokers Hamilton Hindin Greene, said Bennett had done a good job of restructuring NZX and diversifying its revenue.
"I think the restructuring and acquisitions and developing business units was all quite costly ... but I think it does set the company up for very good future growth," he said.
"Having said that, investors will be relatively disappointed with the NZX share price performance in the past few years."
Bennett was unavailable for an interview today, but in a statement he said he was "extremely proud" that a "terrific team" had been built at NZX.
"It has been an intensive four years of change that I have led NZX through and with that process largely complete, I've decided that the end of the year is the right time for someone else to drive the next phase of growth."
NZX's markets business had been rebuilt and would provide a platform for growth from a stable cost base, Bennett said.
Miller, NZX's chair, said Bennett had been a "transformational leader".
"Since Tim took the helm in 2012, he has successfully repositioned NZX's strategic direction, ensuring NZX can take advantage of future growth opportunities in the markets," he said.
NZX confirmed that Bennett's CEO share scheme would remain in place for its scheduled five-year duration.