Old Mutual ‘separates with’ Peter Moyo, but chair Trevor Manuel says his performance was not in doubt
Manuel says a long-standing conflict of interest is what caused the breakdown in the relationship, but Moyo has said he is not going quietly
Old Mutual said on Friday it had parted ways with CEO Peter Moyo because of a material breakdown of trust and confidence, which occurred due to the management of conflicts of interest in business relations with related parties.
“The board of Old Mutual has decided to separate with the group CEO Peter Moyo. Pending conclusion of this and to manage it effectively, the board considered it appropriate to suspend Mr Moyo, so releasing him from his duties and enabling the appointment of an interim CEO,” Old Mutual said in a Sens statement on Friday afternoon.
“The decision to separate with the CEO is neither the result of performance or financial misconduct related to the Old Mutual business, and is purely related to the conflict of interest issue,” the company said.
Chair Trevor Manuel said the group’s board was satisfied with suspended CEO Peter Moyo’s performance, but conflict of interest is what caused irretrievable problem.
“We must be careful never to create a straw story that he did something wrong. We never said he did something wrong. Doing something wrong and a breakdown in trust are not the same thing,” said Manuel during the company’s AGM on Friday afternoon.
Although Manuel shed a bit of light on the reason behind the move, saying it had to do with “business relations with a related party”, he did not want to elaborate what this conflict of interest entailed.
Moyo told Reuters that his suspension related to a disagreement over how the company should engage with investment firm NMT Capital, which he founded. Old Mutual Life Assurance Company, a subsidiary of Old Mutual, is an investor in NMT Capital.
Moyo, who previously served as CEO of NMT Capital and remains a non-executive director, said the relationship between the companies had always existed and been properly disclosed. “There is actually absolutely no wrongdoing on my part.”
Manuel said the said conflict of interest existed before Moyo’s return to Old Mutual in 2017 and at the time of his appointment, the company thought it would be manageable. He said the board and Moyo could not agree on how to manage it any longer.
“In our original engagement with Mr Moyo in June 2017, the matter was raised and covered contractually. We were mindful of it,” said Manuel adding that reference to it was on the company’s pre-listing annual financial statements.
However, shareholders wanted to know why the conflict of interest was a problem now when the company was always aware of it.
“To the best of our ability we tried to manage it, but sometimes these things become unmanageable and I think we’ve reached that point,” he said. Manuel said the board considered that suspension of Moyo would be the right thing to do in the interest of corporate governance, although it was “probably the hardest thing any of us had to do”.
Old Mutual will have further discussions with Moyo during his suspension period, said the board’s chair of the audit committee, Nosipho Molope, and the group will update shareholders on the outcome of those engagements.
Shareholders wanted to know if Moyo would be receiving a golden handshake from Old Mutual for the sudden departure, but Molope said it was premature to say given discussions that are yet to take pace with Moyo.
According to Old Mutual’s remuneration report for the year ended December 2018, Moyo received a total compensation R50.5m, the biggest contributor being his R15.4m reward from the managed separation incentive plan.
This isn’t the first time Moyo has figured in boardroom dramas. In 2016, while chair at Vodacom, Moyo tried to buy a large stake in the mobile phone company through NMT, his investment vehicle, from Africa’s largest fund manager, Bloomberg previously reported. This deal was later scuppered.
He resigned as CEO of insurer Alexander Forbes in 2007 after a disagreement with the board.
This was Old Mutual’s first AGM since listing after the managed separation in June 2018. In a shocking move, 69% of shareholders voted against the implementation of the company’s remuneration report. This vote is non-binding to Old Mutual; however, the JSE rules require that companies engage aggrieved shareholders.
Manuel said the company would talk to shareholders as the company had made a commitment to understanding what they required from the board and the executive team. “Shareholders should expect us, certainly as a governance team, to engage them so that we will not be embarrassed in the future.”
The board has appointed Old Mutual’s COO, Iain Williamson, as acting CEO.
Not going quietly
According to Bloomberg, Moyo has signaled he had no intention of going quietly. He insists he’s done nothing wrong and his links with NMT are above board. He is demanding a “complete” payout deal before he even considers accepting an exit offer, he said by phone on Friday.
“Old Mutual will suffer from the reputational damage,” Warwick Bam head of research at Avior Capital Markets, said by text message. However, from a corporate governance point of view, the decision was the right one, he added.
Next up will be a negotiation over a payoff and Moyo’s salary during his suspension period.
“There are still discussions that are happening between Mr Moyo and the board and when those discussions have been concluded, we’ll be in a position to comment. I don’t know when those will be concluded,” Tabby Tsengiwe, a spokesperson, said by phone.
With assistance from Londell Phumi Ramalepestaff writer