Big funds pushing for shake-up at Sasol
Sasol has been asked by some of the biggest fund managers to consider executive changes including ousting Stephen Cornell, one of two CEOs, over cost overruns at a flagship project, say informed sources.
The money managers began meeting Sasol’s board and leadership after it raised the estimated cost of the Lake Charles plant in Louisiana by $1bn on May 22, having increased it only three months earlier. Investor representatives including Allan Gray and Coronation Fund Managers, said they wanted management to take responsibility for the costs escalation at the $13bn chemicals project, the sources said, asking not to be identified.
The companies both own Sasol stock, and are SA’s thirdand fifth-biggest fund managers. They also questioned the need for the company, which is SA’s biggest by revenue, to have coCEOs, the sources said.
They suggested that Cornell leave and Bongani Nqwababa be retained.
Cornell has been more involved in the Lake Charles project and is paid more than Nqwababa, boosting costs, they said. In the year ended June 2018, Cornell was paid R46.3m in salary, benefits and incentives, and Nqwababa got R25.9m, according to the annual report.
“It would not be appropriate for Sasol to comment on behalf of its shareholders,” the company said in an e-mailed response to questions.
Earlier in August, Sasol confirmed that it had met a number of shareholders to “hear their views, concerns and expectations”. Concern has been mounting over the costs of Lake Charles. Sasol delayed its annual results on August 16, saying it had not completed a review of problems at the project.
Since the May announcement, the stock has fallen 34%, the most on the JSE top 40.
Sasol, which produces chemicals around the world and motor fuel from coal in SA, has a market value of R176bn.
Cornell has held his position at Sasol since mid-2016, after serving as executive vice-president of international operations for the company during the previous two years. Before that, he worked for BP.