NZX chief Mark Weldon resigns

NZX chief executive Mark Weldon is stepping down after 10 years in the role. Photo / Mark Mitchell

Mark Weldon is stepping down as chief executive of NZX Ltd, the operator of the New Zealand stock exchange.

NZX has just announced that Weldon told the board he will step down as chief executive in the first half of next year, after nearly ten years in the job.

"Mark has effectively been founder, as well as leader, of NZX, as we now know it, since 2002. Under his stewardship, NZX has grown from a small and threatened mutual exchange to a thriving information, markets and infrastructure business, with a range of integrated business lines, a healthy balance sheet and a valuable set of options for future growth," said NZX Chairman Andrew Harmos in a statement.

"Following the successful execution of NZX's second five-year strategic plan, Mark has indicated that the time is now right for him to leave the company. The Board respects his decision. "

Harmos said that during the period of Mark's leadership the organisation had grown from a 2002 position of revenues of $10.4 million, a loss of $500,000, no dividends and a valuation at $15 million, to its current position of operating profit approaching $30 million, dividends this year of $17.24 million and a market capitalisation of around $288 million.

By the eighth anniversary of its listing, NZX had generated a total return to shareholders of 535 per cent, or 24 per cent per annum.

"Given the strength of the organisation and the wind that is now at our backs, I believe this is very close to an optimal time for both the individual and the organisation," said Harmos.

In the same statement Weldon said, "I have been privileged to have the opportunity to lead NZX throughout this time, working with wonderful, talented and passionate people who care deeply about our markets and the companies that depend on them to grow. Although it's been a very tough decision to leave, I know it's the right time. The organisation is in such good shape, with momentum building that will provide a positive working environment for the next CEO."

The statement does not say what Weldon is going to do after stepping down.

Weldon graduated from Auckland University with a first class honours degree in economics and a Bachelor of Commerce. He studied at the Columbia University School of Law in New York, graduating in 1997 with a Doctorate in Jurisprudence.

He worked for New York law firm Skadden, Arps, Slade, Meagher & Flom and was a senior engagement manager at McKinsey & Co. He also swam for New Zealand at the 1992 Summer Olympics in Barcelona.

Tipped as being a potential National Party candidate, the idea of Weldon as politician gained traction earlier this year when Prime Minister John Key appointed him head of the Government's Earthquake Appeal.

But Weldon himself downplayed any political aspirations at the time.

"That's not on the table. I've got one thing on my mind at the moment and that's this fund and getting as much support as we can for Christchurch."

Weldon said funds raised in the appeal would be applied to "community infrastructure" that was often taken for granted but which had been built up over a century in the city.

Weldon's appointment to the top job at the NZX was widely welcomed ten years ago, when he was seen as a breath of fresh air, shaking up the old-fashioned image of the New Zealand Stock Exchange.

In an interview last month, Weldon said partly privatising Meridian, Genesis, Solid Energy and Mighty River Power, and the selldown of the Government's 79 per cent stake in Air NZ, would change the "thickness" of the market.

"If you put Trade Me, Chorus, and the Fonterra non-voting share together, and put it with tax changes, savings and the SOE policy together, then you have got an interesting two or three years coming up," he said.

Weldon says the market has suffered over the past 12 to 15 years from what he calls three "macro blockers".

The first has been a tax policy that dramatically favoured land and rental property as an investment choice. Changes to the rules on depreciation have meant rental property is not the "free ride" it oncewas.

"If you look at the tax system, it does not yet favour equity investment, but it is not so negative towards it as it once was," he said.

The second has been savings, or the lack of them. Weldon, and others, have pointed to Australia's successful compulsory pension savings scheme, which has snowballed since its inception in 1993.

"You get the sense that we are getting near that point with KiwiSaver," he says.

The third has been where the country's assets are held.

"While it is true to say that the market has remained relatively flat in terms of the number of listed companies, the Government has been sitting on some very large businesses for a long period oftime."

Weldon has high hopes that the debut of the SOEs will change attitudes towards investing.

"Hopefully hundreds of thousands of Kiwis owning shares in something like Mighty River Power - getting a dividend cheque, seeing that the dividend is higher than they could get from the bank, and seeing the share price go up - that's when you get a generational shift."

Almost exactly a year ago, leading market commentator Brian Gaynor said New Zealand's capital markets - which he described as "the lifeblood of a modern capitalistic economy" - had fallen further and further behind the rest of the world.

Gaynor said Weldon had started well, but seemed to have "run out of steam".

The NZX had fallen well behind the ASX and SGX total market capitalisation - important because because stock exchanges were the main way a country's savings were channelled into areas where they are most effectively used.

NZX's market capitalisation had increased by much less than fellow exchanges in Australia and Singapore, said Gaynor, with the value of shares traded on the exchange also increasing much less - 21.1 per cent compared with 311 per cent in Australia and 157 per cent in Singapore.

The low level of turnover on the NZX has encouraged New Zealanders to invest in Australia through the ASX. The number of companies listed on the NZX was also poor in comparison.

"NZX chief executive Mark Weldon started with a hiss and a roar but he seems to be running out of steam against huge headwinds, particularly our low saving rate, poor regulation and the tax advantages of property investment," said Gaynor.

NZ HERALD ONLINE / BusinessDesk