the g spot
Clipping Goliath’s wings
The FM asked the owners of leadership consultancy Metaco to sketch out their main gripe with Comair’s governance
Leadership consultancy Metaco, a small family-owned business, accuses aviation stalwart Comair of reneging on an agreement to buy it out and of "grinding it into the ground" in the process. That’s quite a claim against a company that has been around since 1946, with an enviable track record in showing consistent profit. But Metaco directors Barbara Walsh and Danny Tuckwood have also raised concerns about Comair’s well-entrenched independent board directors, some of whom have served more than three decades, and say the fees it pays its chair and nonexecutive directors are "excessive". The FM asked the Metaco owners to sketch out their main gripe with Comair’s governance …
DT: Martin Moritz, Rodney Sacks, Piet van Hoven and Dr [Peter] Welgemoed have served 40, 39, 46 and 25 years on the board respectively. Their expertise may be valuable — I cannot comment on that — but they cannot be seen as independent.
They also form both the nominations committee (and would therefore have to recommend their own removal from the board) and the remuneration committee (and therefore recommend what they and others should be paid).
This puts excessive power in a few hands. They are not subject to any effective checks and balances in their conduct, nor in their influence upon the activities and behaviour of the executive — as we have experienced at Metaco.
Furthermore, the company secretary is not independent, as recommended by King 4, and the same audit firm has been in place for 52 years.
Can you elaborate on how this relates to Comair’s dealings with Metaco?
DT: In my view, the board had not applied their minds to the acquisition and disposal of Metaco, causing significant damage to the business. There are similarities between what’s happening at the overall board and our experience over the past 12 months — they seem to follow a similar pattern of behaviour. They are connected in that way, but rather than a case of "gunning" for Comair we’re just highlighting what can happen if things aren’t done in the right way.
In a nutshell, what has Comair done to Metaco?
BW: We sold a company that was doing well into Comair, changed the strategy to accommodate Comair; Comair changed their strategy and decided that they didn’t need us anymore and we were left with a shell of what we had before. That’s why we have to take them on. Because the approach we have applied in taking them on is exactly what we would have done with any other business we worked with who had a crisis event happen to them. If we can’t do this with ourselves then what is our work really worth? It’s … standing up for what’s right. What they did was wrong and the way that they did it was wrong.
What would be a reasonable outcome for Metaco?
BW: A reasonable outcome would be if Comair had been prepared to sit around a table and discuss a settlement with us. We tried to do this before: a settlement that would have enabled us to pick the company off its feet and carry on. And obviously we weren’t expecting to have to pay back the purchase price of the company after what had been done. They’re not prepared to entertain that, we’ve tried twice to sit with [Bidvest CEO] Lindsay Ralphs, who’s now the new chair. That request has gone completely ignored and so we have no option but to take it to arbitration. I think we’ve done everything we could to try and have a discussion around this.
Are you Comair shareholders and have you looked to rally any other minority shareholders?
DT: Both Barbara and I are shareholders. In terms of the shareholding, there are three or four major shareholders, Bidvest being the largest. I wasn’t able to canvass [others] ahead of time, but Ralphs did agree with a number of points that were raised at the AGM and said that as incoming chair he would look at those issues, but it would depend on the key shareholding groups who have the majority on the board.
What now for Metaco?
BW: I think it’s twofold. In terms of the sale contract we are obliged to take it to arbitration, which we have done. Comair have also told us that if we did that they would drag it out, so we have to manage that.
On the other hand, it’s not so much that we are trying to rally public support, but perhaps [we can] be the company that shows other companies they can stand up for themselves. That it’s not all about the guys who have the biggest pockets but the guys who think strategically and who can tap into their networks. It’s more to be of hope to other people, whether it be small companies who are being bullied or people in other organisations that are being bullied.