New Comair chair to shake up board
Bidvest CEO Ralphs says largest shareholder is ‘very uncomfortable’ about lack of independence of some nonexecutive directors
Aviation group Comair, which runs Kulula and British Airways SA, is set for a board shake-up after the appointment of Bidvest CEO Lindsay Ralphs as chair on Tuesday. Bidvest has previously expressed “severe concern” about the lack of independence among some Comair board members, Ralphs said.
Aviation group Comair, which operates Kulula and British Airways SA, is set for a board shake-up after the appointment of Bidvest CEO Lindsay Ralphs as chair on Tuesday.
Bidvest has previously expressed “severe concern” about the lack of independence among some Comair board members, Ralphs said at the company’s annual general meeting.
Bidvest is the largest shareholder in the aviation group, with a 26.91% stake.
The new board chair said Bidvest is “very uncomfortable” about the lack of independence of some of the Comair nonexecutive directors.
“There is a major conflict between us as shareholders and the board. I think this board needs a massive shake-up. I can assure you that I will ensure that happens,” said Ralphs.
Other shareholders also expressed their views on the independence of long-serving nonexecutive directors and the company’s remuneration policy.
Comair has previously defended the tenure of its nonexecutive directors. It said last week its board members were independent and that a nomination committee had assessed their independence.
Shareholder Danny Tuckwood said on Tuesday some of the long-serving members of the board, including outgoing chair Pieter van Hoven, served on the nomination committee and could not conduct a review of their own independence.
LONG-SERVING MEMBERS
Van Hoven has been on the Comair board since 1993. Other long-serving board members include Martin Maritz, who has been on the board since 1979, and Rodney Sacks, who has been serving since 1980.
Ralphs defended Van Hoven’s appointment as lead independent director.
“My knowledge of the aviation industry is limited.
It was felt that, for a period of one year, I should have the assistance of Van Hoven,” said Ralphs.
Another shareholder, Jimmy Kyriacou, also questioned Comair company secretary Derek Borer’s other role as alternate director on the board for Martin Louw and Sacks.
Kyriacou said the arrangement compromises Borer’s independence. The company secretary should remain at arm’s length from the board and its members, he said.
Van Hoven said that the concerns about Borer’s dual roles would be discussed at the next board meeting.
In its annual report, Comair said that as an alternate director, Borer could not have an arm’slength relationship with the Comair board.
Tuckwood also questioned Comair’s decision to opt for joint CEOs in Wrenelle Stander and Glenn Orsmond.
“Joint CEOs don’t work unless there are clearly defined lines of responsibility, which [in Comair’s case] appear absent,” he said.
Van Hoven said there is no division of responsibilities between Stander and Orsmond, who were appointed on July 31.
Meanwhile, a section of Comair shareholders rejected the company’s remuneration policy, with 31.95% voting against it. Because more than 25% of the shareholders voted against the policy, Comair is required to contact the shareholders who rejected it.
Some of the shareholders also rejected the company’s proposed remuneration for nonexecutives, in terms of which the chair’s fees will increase from R1.59m to R1.67m.
A total of 32.84% of the shareholders voted against the remuneration policy for nonexecutive directors.
“The board will have to reconsider the nonexecutive directors’ remuneration. For the time being, the remuneration continues as it was in the previous financial year,” Borer said.
In the year to end-June, Comair increased earnings from R326m to R897m, largely due to the R1.1bn settlement agreement concluded with SAA regarding the market abuse complaint lodged by Comair in 2005.
Comair’s share price was down 1.72% to R2.85 on Tuesday. The stock is down 45.19% since the beginning of 2019.
JOINT CEOS DON’T WORK UNLESS THERE ARE CLEARLY DEFINED LINES OF RESPONSIBILITY, WHICH APPEAR ABSENT