Old Mutual vs Moyo: Now for round two
Moyo has been reinstated, but the spat’s ugliness means he’s unlikely to have a long-term career at Old Mutual
Only two things seemed certain on Tuesday as the investment community digested the high court judgment in the Old Mutual vs Peter Moyo wrangle: the insurance giant would relaunch its bid to remove its CEO and this time it would play close attention to procedure; and Moyo was in line for a much more attractive settlement from his employer of two years.
The high court reinstated Moyo to his position of CEO, after he was fired in June following a "breakdown of trust" between him and the board, chaired by former finance minister Trevor Manuel.
It was a highly embarrassing turn of events for the company, following the high-profile spat between Moyo and the board. It led to the stock tumbling 5.6% on the JSE.
Given that Moyo has said he wants the entire board of nonexecutives to be declared delinquent and therefore fired, it is difficult to imagine he could have a long-term career at Old Mutual. And it’s impossible to believe he and Manuel could function on the same board.
"Moyo can’t do his job any more," says David Shapiro of Sasfin Securities. "He’s lost the public’s respect and support and all that does is put him in a very strong position to negotiate his way out of this with a much bigger pay package. It has become a very ugly story and that’s why the share price is going down."
Moyo did not respond to requests for comment.
Just days before the release of the ruling that most had initially expected to go in Old Mutual’s favour, there were rumours in the market that things might not go its way.
One asset manager said there were hints that it might lose a few days earlier. Northstar Asset Management MD and CIO Adrian Clayton told the FM: "It had nothing to do with anyone’s behaviour and more to do with processes." Clayton said he needed to read the judgment in full.
A leading academic said it was apparent that the court’s decision was decided on labour law. "Old Mutual did not follow the process set down by the Labour Relations Act," he said.
If a person is an executive director, as Moyo was, he is both a director and an employee. "To get rid of him, the labour law must first be followed and thereafter he can be removed from office as a director."
He said it was unclear on what basis Old Mutual had fired him — on the basis of labour law or as a director. A director can be removed for a breach of fiduciary duty, which includes breach of trust as Old Mutual was claiming.
The labour law required that Moyo be given a disciplinary hearing before being suspended and fired. Old Mutual suspended Moyo on May 23, citing a conflict of interest due to his involvement with NMT Capital, a company he co-founded.
Conflicts of interest are likely to be taken far more seriously in future.