AngloGold chief leaves strong, stable strategy
The surprise resignation of the well-regarded Srinivasan Venkatakrishnan as CEO of AngloGold Ashanti to join Vedanta Resources is a case in point where an individual is conflated with the company’s strategy, a perception chairman Sipho Pityana was at pains to point out was not the case as the gold company begins the hunt for a new head.
With strategy set by the board in close conjunction with the CEO, AngloGold’s game plan will not change, Pityana said after the market digested the morning news that Venkatakrishnan, who has been with the company for 18 years — five of those as CEO — was leaving.
A down-to-earth and accessible CEO, Venkatakrishnan, who was the financial director of the world’s third-largest gold miner, had clearly articulated the company’s strategy and unusually, as analysts pointed out, delivered on those commitments, bringing down costs, removing unprofitable mines and investing in fresh growth.
Unfortunately, that strategy cut AngloGold’s historical footprint in SA to just a single mine and a tailings retreatment operation, but for shareholders it meant a better quality suite of assets around the world.
Internally, Venkatakrishnan was spoken of as a highly ethical executive who allowed his managers to get on with their jobs without interference but who demanded the best value possible from all decisions made within the company.
Leaving behind a strong group of managers and a clearly articulated strategy fully endorsed by the board must surely be one of Venkatakrishnan’s legacies.
It does make finding his replacement a little easier, with the new CE likely to come from within the company, something that would allow AngloGold to seamlessly continue along its strategic trajectory.
There’s an urban legend that suggests investors should be wary of companies that build shiny, colossal new headquarters. The argument is that companies do this when optimism is at its peak, and that such investments often precede a downturn.
On a macro scale, the “skyscraper index”, punted in 1999 by investment banker Andrew Lawrence, says huge buildings tend to pop up just as economies overheat.
The Chrysler and Empire State buildings in New York were commissioned in the early days of the Great Depression and the theory applies even today, according to Lawrence’s research.
Looking through the same lens at Johannesburg’s financial hub of Sandton, then, it would not be entirely unreasonable to feel a tad afraid.
Behemoth office blocks, housing the likes of financial services firms Discovery and Old Mutual, law firm Webber Wentzel and energy company Sasol, are springing up all the time in what is certainly not an overheating South African economy, despite what the Sandton skyline might suggest.
Since the start of 2018, shortly after Discovery’s employees moved into the financial services company’s R3bn head office, the group’s shares have ominously slipped from R186 to R171.45.
However, shares in Sasol have gained since the firm’s employees moved into the group’s new headquarters in late 2016.
Hopefully, SA and its companies are the exception, rather than the rule, under Lawrence’s model.