Big investors want executive changes at Sasol, starting with Stephen Cornell
Cornell has been more involved in the problematic Lake Charles project and is paid more than co-CEO Bongani Nqwababa, boosting costs, they say
Sasol has been asked by some of the country’s biggest fund managers to consider executive changes including ousting Stephen Cornell, one of two CEOs, over cost overruns at a flagship project, according to people familiar with the matter.
The money managers began meeting Sasol’s board and leadership after it raised the estimated cost of the Lake Charles plant in Louisiana by $1bn on May 22, having increased it only three months earlier. Representatives of investors including Allan Gray and Coronation Fund Managers said they wanted management to take responsibility for the escalation in costs at the $13bn chemicals project, the people said, asking not to be identified.
The companies both own stock in Sasol and are SA’s third- and fifth-biggest fund managers.
The investors also questioned the need for the company, which is SA’s biggest by revenue, to have co-CEOs, the people said. They suggested that Cornell leave and Bongani Nqwababa be retained.
Cornell has been more involved in the Lake Charles project and is paid more than Nqwababa, boosting costs, they said. In the year ended June 2018, Cornell was paid R46.3m in salary, benefits and incentives, while Nqwababa made R25.9m, according to the company’s annual report.
“It would not be appropriate for Sasol to comment on behalf of its shareholders,” the company said in an e-mailed response to questions. Earlier in August, Sasol confirmed that it met a number of shareholders to “hear their views, concerns and expectations”.
Concern has grown over the costs of Lake Charles with Sasol on August 16 delaying its annual results, saying that it had not completed a review of the problems at the project.
Since the May announcement, the stock has fallen 34%, the most on the JSE top 40. Sasol, which produces chemicals around the world and motor fuel from coal in SA, has a market value of R176bn.
Cornell has held his position at Sasol since mid-2016, after serving as executive vice-president of international operations for the company for the previous two years. Before that he worked for BP.