BRUCE WHITFIELD: Why we need more women CEOs

The appointment of Nompumelelo Zikalala as CEO of Kumba Iron Ore brings to four the number of women running top 40 JSE-listed companies – a record number.

Zikalala is currently MD at De Beers and will succeed Themba Mkhwanazi as CEO of Kumba at the start of 2022. She is the second woman in Anglo American to head up one of the listed businesses it controls, after Natascha Viljoen became CEO of its platinum business. Zikalala joins Mpumi Madisa at Bidvest and Bertina Engelbrecht at Clicks. Engelbrecht is taking over from Vikesh Ramsunder, who announced last month he was emigrating to Australia. Two other firms on the JSE are run by high-profile women: Sygnia, founded by Magda Wierzycka; and JSE Ltd, with Leila Fourie as CEO. The firms are worth R2.6bn and R9.45bn respectively, but are too small to be included in the index of the country’s biggest companies.

A 2019 study by S&P Global found that firms with women CEOs and CFOs produced superior stock price performance compared to the market average. In the 24 months after their appointment, women CEOs saw a 20% increase in stock price momentum and women CFOs saw a 6% increase in profitability and 8% larger stock returns.

Should that sort of outperformance occur in SA, investors in those firms would be in for a solid pay day – not that it would have an enormous impact on the index, though. While four women may be at the helm of 10% of firms on the top 40, their total market capitalisation of just R650bn is less than 4% of the value of the R18-trillion value of all shares on the JSE, largely skewed in favour of Prosus and Naspers and their investment in Tencent in China.

The study makes for compelling reading. It also found that firms with high gender diversity on their board of directors were more profitable and larger than firms with low gender diversity.

The study says firms with women CEOs had double the percentage of women board members, compared to the market average (23% vs 11%). In this respect, SA has a long way to go, but gender and race diversity are growing themes in JSE-listed companies.

It’s ironic that Anglo American, once the bastion of male dominance of SA corporate life, is leading the gender transformation agenda on the JSE. When then CEO Cynthia Caroll, two years into the job, rejected a takeover bid from Xstrata led by SA- born Mick Davis as “totally unacceptable”, retired deputy chair Graham Boustred nearly choked on his pink gin, telling Business Day: “This woman’s hopeless. There’s no morale [at Anglo].” He suggested it was difficult to find successful women CEOs “because most women are sexually frustrated. Men are not because they can fall back on call girls. If you have a CEO who is sexually frustrated, she can’t act properly.” In 2012 Carroll resigned amid criticism over her acquisition strategy, and for most of the decade from 2010, just two women – Maria Ramos at Absa and Nicky Newton-King at JSE Ltd – were at the helm of significant listed entities.

Several studies in addition to the research by S&P Global have shown similar outperformance by companies run by women.  The S&P research found over the time of the study that women bosses saw more value appreciation and improved stock price momentum for their firms, whereas women CFOs drove more value appreciation, better defended profitability and delivered excess risk-adjusted returns for their firms.

The study concludes: “We proposed that the observed outperformance was a result of above-average talent among female executives. The female contenders for C-suite positions represent a relatively underutilised pool of talent, possibly attributable to a higher degree of scrutiny from the firms’ board of directors and consequently resulting in the tendency of females in C-suite positions to be more talented.”

It implies that male-dominated boards are more rigorous in their selection process when appointing a woman to run a business. Perhaps if they applied similar rigour when hiring men, all of our investments would improve.

Whitfield is a contributing editor to the FM