EDITORIAL: No winners in Old Mutual boardroom battle
There are three losers in this protracted war: Peter Moyo, the insurance giant and shareholders
When Peter Moyo resigned as CEO of Alexander Forbes in 2007, after just two years at the helm, the pension fund administrator’s reasons for parting ways with him did not go any further than a “difference of opinion” between him and the board.
Alexander Forbes board, led at the time by Bruce Campbell, was wise to ensure those differences were mutually confidential, sparing the company further damage after it had been accused of skimming off millions of rands in secret profit from its clients benefits and funds.
As a messy boardroom brawl between Old Mutual and Moyo plays out in the full glare of a harsh media spotlight, the board of the SA insurance giant should be kicking itself for not relentlessly pursuing a separation agreement that ensured a smooth parting of ways.
There are no winners in this public war of words. Shareholders are watching in dismay as the price of their stock falls behind rivals, Old Mutual’s reputation is being tainted, and Moyo will likely not be the first choice for those tasked with recruiting corporate leaders.
Furthermore, the board is distracted at an inopportune time for Old Mutual, which is in the middle of reasserting itself as a pan-African insurance group following a major overhaul and its primary listing on the JSE in 2018.
In the latest episode to the drama that began in May, Moyo turned up for work at Old Mutual’s 12-storey tower block in Sandton on Monday following a second court victory on Friday that a previous reinstatement order stands.
But Old Mutual, which initially fired the business leader in June over a breakdown in trust and alleged conflict of interest, barred Moyo from resuming is duties as it has filed a court application seeking to enforce its second dismissal letter dated August 24.
From the beginning of the saga, the courts have been ruling in favour of Moyo, calling into question the legal advice Old Mutual received in pursuing the matter in court. The board, as the court has twice shown, was procedurally wrong in dismissing Moyo in June, two weeks after he had been suspended.
Recognising the damage the tussle is having on Old Mutual’s reputation, board member Pinky Moholi told Business Day in recent weeks that it was time for both parties to get behind closed doors and settle the matter.
The longer the case drags on, the easier it would be to believe that the case has more to with corporate egos than a genuine attempt to enforce Old Mutual’s rights as an employer. In fact, Dali Mpofu, Moyo’s lawyer, told the court in August that unnamed board members had refused his client’s bids to settle out of court.
For Moyo, his dramatic exit burns a lot more bridges than the one at Old Mutual and establishes a track record of clashing with the board, as was the case at Alexander Forbes more than a decade ago. It would be difficult for any board to recruit a CEO who is not averse to offer an uncensored take on the behind-the-scenes workings of a corporate boardroom.
The third losers in this fiasco are shareholders. Old Mutual’s share price has dropped about 10%, or R10bn, since May when the group said it had suspended Moyo, lagging behind rivals such as Sanlam and Discovery and the broader JSE all-share index.
The decision to go to court has thrown Old Mutual into a leadership limbo as the court has ruled that the company should suspend the recruitment of a new CEO until the matter is resolved.
It is times like these when shareholders and corporate leaders see value in brief statements posted on JSE news service SENS, saying a CEO has resigned for personal reasons or to pursue other interests.