Hassen Adams: from the board. Adams, the GPI executive chair has missed the past two meetings of shareholders due to ill health. Picture: Hetty Zantman
Hassen Adams: from the board. Adams, the GPI executive chair has missed the past two meetings of shareholders due to ill health. Picture: Hetty Zantman

It could not have been scripted better for shareholder activists at Grand Parade Investments (GPI). This week, recently appointed CEO Prabashinee Moodley resigned just ahead of the AGM on Wednesday.

Moodley is the third CEO to exit the embattled empowerment investment company in less than 24 months, and her departure comes amid efforts to find a profit recipe for its food segment, which is centred on the Burger King master franchise for SA.

The GPI share price responded enthusiastically to Moodley’s departure, rising 6.5%. This perhaps signals hope of inspired leadership changes as the influence of shareholder activists at the company grows.

A vote on Moodley’s appointment as an executive to the GPI board had been set for the AGM. Her resignation came only days after a group of shareholder activists, speaking for roughly 12.5% of GPI, gained enough support at an extraordinary general meeting (EGM) to vote two new nonexecutive directors — former SABMiller executive Mark Bowman and former Spur Corp FD Ronel van Dijk — onto the board.

Moodley’s decision to step down also followed news that turnaround specialist Value Capital Partners (VCP) — well known for its efforts at Adcorp and Altron — had quickly built an influential stake of just over 8% in GPI.

Only last week the shareholder activists — Kagiso Asset Management, Denker Capital, Excelsia Capital, Westbrooke Alternative Asset Management and Rozendal Partners — reiterated their concerns about executive departures at GPI in correspondence to shareholders.

The activists argued that the current board’s skills and experience were not aligned to the company’s strategic intent. GPI’s shift into the quick-service restaurant (QSR) industry and reduced exposure to gaming assets "require a board with relevant industry skills, knowledge and experience", they said. "This is vital to the long-term success of GPI given that the board sets the company strategy and is responsible for holding management to account on the execution of this strategy."

The activists were also concerned that the spate of executive departures indicated leadership challenges.

Moodley’s resignation followed those of her predecessors Alan Keet and Tasneem Karriem. Burger King also lost a CFO and a CEO. The activists suggested the current governance structures were not sufficient to attract and retain the best talent, which was crucial for GPI’s long-term success.

Value Capital Partners has quickly built an influential stake of just over 8% in GPI

The circumstances around Moodley’s departure are clouded by a curious explanation from the GPI board. A Sens announcement said: "Given Ms Moodley’s passion and expertise in food service and retail, Ms Moodley has decided to step down from her position due to the current market sentiment with regards to the QSR industry." Go figure …

When Moodley was appointed CEO in July there were high hopes she could turn Burger King around. At the time GPI described her as an experienced QSR executive who had held senior positions at Dunkin’ Brands and McDonald’s in the US and globally.

Independent analyst Anthony Clark says GPI has been a revolving door for executives. "Moodley had only been there for five minutes. She was very quiet and barely raised her voice [during her tenure as CEO]."

Clark thinks the presence of highly experienced QSR and fast-moving consumer goods directors like Bowman and Van Dijk on the GPI board might have placed intense scrutiny on Moodley’s fast-food brands strategy.

At last week’s EGM, long-serving GPI nonexecutive director Alex Abercrombie played down the recent departures at the company.

The reassurances ring hollow after Moodley’s exit, which might prompt further board changes.

Ricco Friedrich of Denker Capital dismisses the Sens announcement of Moodley’s departure as "rubbish".

"There’s the truth and then there’s GPI’s version of the truth … which quite frankly borders on complete misrepresentation. When you have so many CEOs and CFOs resigning in as little as three years, then it shows the ineptitude of the board. This is far from over," he said.

There is now increasingly audible speculation that GPI prime mover, major shareholder and executive chair Hassen Adams could step down. He has missed the last two meetings of shareholders due to ill health.

Additional board changes could ensure activist shareholders — and VCP — have a bigger say in appointing a new CEO with extensive QSR experience.

Aside from its fast-food interest, GPI also holds valuable minority stakes in the GrandWest Casino, the Golden Valley Casino in Worcester, limited-payout-machine specialist SunSlots and a property on Cape Town’s Foreshore.