Dropping like flies: SA’s great C-suite exodus

At least 41 CEOs and CFOs have resigned from their positions in companies listed on the JSE in the past 16 months, with the highest turnover seen in CFOs as the role becomes more challenging with high interest rates driving up lending costs.

More telling is that, in most cases, no successors are named. A common theme is that companies are embarking on a “process of identifying a suitable replacement to fill the vacancy”. This raises serious questions about companies’ succession plans or the lack of them.

Craig Pheiffer, chief investment strategist at Sasfin Wealth, said succession planning is critical in any business.

“Generally a company’s board sets out the strategic direction and the executives operationalise it and drive the strategy on a day-to-day basis. When implementation of the strategy is interrupted by the departure of a key executive, it can have serious consequences for the organisation. Getting a new executive up to speed on the strategy can take time and the business can lose momentum,” said Pheiffer.

“Effective succession planning helps maintain that momentum, retains the ethos of the management approach and builds the confidence of investors, lenders and other stakeholders. Whatever investment style one might follow, the quality of management is always a key company attribute to analyse. A lack of succession planning or business continuity only detracts from the investment case.”

Pheiffer gave the example of celebrated US investment firm Berkshire Hathaway. “Warren Buffett and Charlie Munger at Berkshire Hathaway are well into their nineties and they have been grooming executives to run with the business for some time. A Warren Buffet is hard to replace, but you can bet that the successors are already dyed-in-the-wool Buffet-style investors.”

A team of researchers from Stanford Graduate School of Business and Yale School of Management conducted a study which found that voluntary separations almost always involve the naming of a permanent CEO, while involuntary exits involve a higher number of interim successors.

Recent C-suite resignations have ranged from consequence management to the bizarre.

Gold Fields CEO Chris Griffith fell on his sword after his company’s failed bid to acquire Canadian precious metals miner Yamana Gold. The miner is now  run by interim CEO Martin Preece.

Anglo American Platinum CEO Natascha Viljoen announced her resignation in February,  and will join US-based Newmont Corporation after serving 12 months’ notice.

Carmen le Grange, who was announced as Sygnia’s new financial director only in February, could not even serve a day in the role after her appointment was withdrawn a day before she was supposed to start.  The group said this was  due to “personal reasons”.

Sygnia’s mainstay CEO David Hufton resigned from the role in February, and will officially step down at the end of this month to pursue “a career break”.

Transaction Capital announced in March that CFO Sean Doherty will step down from the role at the end of May. This announcement coincided with the company informing the markets of the dire state of finances of its once lucrative subsidiary SA Taxi.

The group said it had to convert the existing intercompany loan of R2bn from the group holding company into equity. It also increased its bad debt provisions for SA Taxi by R1.8bn, taking provision coverage from just more than 4% in 2022 to about 15%.

Oceana, makers of Lucky Star canned fish, last year announced that its CEO, Imraan Soomra, had resigned as the company struggles with accounting problems.

Oceana also placed CFO Hajra Karrim on precautionary suspension. The group later fired her for “gross misconduct”.

Long-serving Woolworths CFO Reeza Isaacs, who was in the role for a decade, will step down at the end of June to pursue “new interests”. The retailer named Zaid Manjra as its interim CFO.

Property firm Sirius’s CFO Diarmuid Kelly resigned last year to take 12 months paternity leave. The company named Chris Bowman in March as new CFO to start his duties in August.

Technology group Ayo is also under new leadership after the retirement of its CEO and resignation of its CFO last year. 

Other companies with leadership changes in recent months include Metair, Grand Parade, Texton Property Fund, Buffalo Coal, Tongaat Hulett, Investec Property Fund, MC Mining and Remgro’s CIVH.

ArcelorMittal SA took nearly two years to find a replacement for Desmond Maharaj after he quit as CFO in 2021, finding a replacement in the form of Siphamandla Mthethwa only last month. It said Mthethwa, Airports SA CFO, will start in the role in July “or sooner if circumstances permit”.

CFOs came under severe pressure in the past two years after high inflation and interest rates brought an abrupt end to “easy money”.

Shareholders are demanding profitability, and higher borrowing costs make that profitability target even harder to achieve, adding stress to CFOs and CEOs.

Makwe Masilela, chief investment officer at Makwe Fund Managers, said that when senior executives leave abruptly, with no apparent heir, it points to a strained relationship between the parties.

“It simply means chaos or the executive been pushed even though they’ll try to sugarcoat it to avoid upsetting current and potential shareholders. Some still have succession plans, but note there’s a possibility that a CEO/CFO can resign before whoever has been earmarked is ready to take over, meaning the successor is still in the baking oven,” he said.

He said CEOs leave when they no longer share the vision of their executives and/or shareholders. Masilela said that another cause of departure is when shareholders think the CEO no longer has credible plans to deliver value for them or has failed to deliver on their mandate.

“CEOs must deliver value to shareholders. The harsh reality is that profits are why people invest in companies.”

A few companies have led the way in terms of succession planning. Sasol said last month that it has a plan to find a successor for CEO Fleetwood Grobler, who is expected to retire at the end of next year.

Curro had an orderly transition recently when CEO Andries Greyling decided to retire. The group appointed CFO Cobus Loubser as Greyling’s successor.

Banking group Capitec said last year that one of its co-founders and CFO, André du Plessis, would retire at the end of June 2022. The group swiftly announced that insider Grant Hardy would succeed Du Plessis.

Property group Balwin also fell back on its succession plan when its CFO, Jonathan Weltman, resigned last year for health reasons. The company replaced him with Jonathan Bigham, its then group finance manager.

While most corporations manage to keep their dirty laundry from the public, SA has no shortage of boardroom meltdowns leading to CEO departures.

Former Old Mutual CEO Peter Moyo’s 2019 dismissal became a messy public affair. Old Mutual fired Moyo for a conflict of interest related to NMT Capital, an investment firm Moyo founded and in which an Old Mutual subsidiary is the only institutional investor.

In most cases, a clash on strategy is what leads to the ousting of CEOs. Daniel Mminele in 2021 left his role as Absa CEO after “disagreements with the board on strategy and culture change”.

But the most spectacular strategy differences emerged with the firing of Alexforbes CEO Andrew Darfoor in 2019. This was after he waged a battle with one of the company’s major shareholders, African Rainbow Capital Investments (ARCI) boss Johan van Zyl.

ARCI questioned Darfoor’s Ambition 2022 strategy with its focus on driving growth through expanding its retail business segment, alongside expansion in Sub-Saharan Africa through selective bolt-on acquisitions.