Five quit Group Five board amid quarrel
Five of Group Five’s seven board members announced their resignations on Friday, saying major shareholder Allan Gray’s demand for the reconstitution of the board had made their continued tenure “impossible”.
Their pending departure leaves recently appointed CEO Themba Mosai and chief financial officer Cristina Teixeira as surviving directors. This comes amid continuing ructions over the group’s strategy between the fund manager — whose clients hold 25% of the company — and the former board members.
Chairwoman Philisiwe Mthethwa, lead independent nonexecutive director Kalaa Mpinga and nonexecutive directors Justin Chinyanta, Willem Louw and Vincent Rague will leave Group Five’s board at an extraordinary general meeting to vote in new directors on July 24, the JSE-listed construction and engineering group said in a statement on Friday.
In a parting shot, Mthethwa said all shareholders including minorities, should have their say in the selection of a new board. The departing directors also warned that they did not agree with Allan Gray’s views regarding the direction of the company, which “involves unbundling significant portions of the group”.
They said it had also become “apparent to the board that other shareholders shared its views in this regard”.
A wholesale change in the nonexecutive directorship would not be in the best interests of the company, the board statement continued.
There were also “serious concerns” with the names put forward by Allan Gray and their nomination as a group, which did not adequately take account of transformation or past collusive behaviour.
“[We] believe that it is not in the best interests of the company and its stakeholders that [it] accept Michael Upton, a former CEO, as a nonexecutive director,” the statement said.
The reconstitution of the board needed to ensure relevant expertise, industry experience, continuity and institutional memory — and also sensitivity to historical industry behaviour.
It also said the appointments also needed to be a “fundamental and strategic commitment to transformation”.
However, Allan Gray director Andrew Lapping said on Friday: “We believe the five people we have nominated have a good combination of skills. Small boards are better than large and they are all totally independent.” Allan Gray had named
Reitumetse Huntley, Nazeem Martin, Nonyameko Mandindi, John Job and Upton as replacement nonexecutives.
“We are pleased the existing nonexecutives have decided to resign. It is unfortunate that they decided to draw out this process to such a degree, given that a lengthy process is not in Group Five’s interests,” Lapping said.
“Allan Gray does not have an agenda with regards to Group Five’s strategy; we want an independent board with the relevant skills that will protect and grow value for all stakeholders.”
On May 18, Group Five issued a cautionary announcement that an unnamed shareholder — later revealed to be Allan Gray — had demanded an extraordinary general meeting to reconstitute its board.
“A lot of people have suddenly left the company — executives and directors,” Lapping had told Business Day in May.
At the time, Lapping said he met all but one of Group Five’s board members, and could not get a clear understanding of the problem.