How bland farewells trail behind a horde of departing executives
Governance analysts and investors agree the recent spate of "retirement" activity is without precedent, writes Ann Crotty
Net1’s May 25 announcement that controversial CEO Serge Belamant was retiring effective June 1 appears to have triggered something of an executive landslide. In the two months since the announcement, more than 10 of the JSE’s largest listed companies announced unexpected and often dramatic changes to their boards.
As if rushing to meet an imagined deadline, Liberty Holdings, Wilson Bayly Holmes-Ovcon, Netcare, Mediclinic, Life Healthcare, Group Five, PPC, Adcorp, Tsogo Sun, Shoprite, Sun International and MMI announced such significant changes.
No one, it seems, keeps close tabs on these sorts of corporate moves, largely because they are so rare. But governance analysts and investors agree the recent spate of "retirement" activity is without precedent.
It is no coincidence that the share prices of all the companies are close to 12-month lows and in many cases, are substantially down on a three-and five-year view.
Thabo is leaving Liberty following a difference of opinion with the board on the immediate focus of the company at a time when the organisation is facing tough operational and environmental challenges
Chris Logan of Opportune Investments says tough trading conditions and political uncertainty means it’s a high-risk, low-return environment and boards are under much greater pressure to perform. Rising emphasis on corporate governance has also contributed. One large fund manager says nonexecutive board members have far more power than before and are expected to use it.
More open corporate governance now obliges listed companies to announce changes to their board. Unfortunately, they are not required to announce anything more than the name of the individual and the date the retirement takes effect.
No reason for the move has to be given, which means stock exchange announcements vary from the brief and bland to longer ones lacking substance.
The award for the most forthright announcement goes to Liberty Holdings, which in May said CEO Thabo Dloti was resigning with immediate effect. "Thabo is leaving Liberty following a difference of opinion with the board on the immediate focus of the company at a time when the organisation is facing tough operational and environmental challenges," it said.
Liberty may have felt this break with the traditional "whatever you say, say nothing" approach was appropriate, given speculation about Dloti’s departure, and possibly because the group had lined up an immediate replacement.
Net1’s announcement that Belamant was retiring was met with a collective sigh of relief from South Africans. The announcement described Belamant as a "visionary technologist" who had left the company in a good position to grow its international footprint.
"The board thanks Mr Belamant for his leadership and enduring contribution to the company and wish him well in more relaxed years ahead," it said. There was no mention of the screaming headlines about Net1 and Belamant’s role in the social grants crisis in SA.
Almost unnoticed in the fuss around Belamant and Dloti was Tsogo Sun’s announcement that its respected CEO, Marcel von Aulock, was "regretfully resigning" after 18 years with the company — including six as CEO. No explanation was given, but Tsogo Sun, which is part of the Hosken Consolidated Investments (HCI) group, has been at the centre of continuing restructuring at HCI. First was the sale of hotels to the group’s property fund, and more recently Tsogo has been negotiating to buy some Niveus gaming assets at hefty prices.
On July 19, PPC told shareholders that nonexecutive director Tito Mboweni had left the company the day before and rather curtly acknowledged his "valued contribution". The nervous share price dropped.
A week later the cement maker announced that CEO Darryll Castle had "decided to resign" but would be available for six months. The share price held up surprisingly well, initially. Last Friday it dropped back towards its record low. With no reasons given, investors assume the departures are related to disagreements about a possible tie-up with Afrisam.
Less surprising was Adcorp’s announcement that CEO Richard Pike was leaving with immediate effect. With him went chief operating officer Nelis Swart. The group’s share price movement over the past five years suggests Pike should have made the move earlier.
Life Healthcare’s CEO of three years Andre Meyer resigned with two weeks’ notice, leaving the company searching for a replacement.
Mediclinic took a much more measured approach. It said CEO Danie Meintjies, closely linked to the underperforming Middle East business, would be retiring at the end of July 2018. Meanwhile, Netcare executive director Jill Watts is to head to Australia for personal reasons.