Black CEO faces uncertain future
Group Five’s new directors voted in this week
Nominated by Allan Gray:
Chairperson of law firm Mkhabela Huntley Adekeye. Nonexecutive director of Capitec
Nyami Mandindi 98%
A professional quantity surveyor. Executive director of Kusile Africa and Petals Global. Nonexecutive director of Hudaco Industries, Hudaco Trading and Itisa. Chairperson of SVA Architects
Has PhD in chemistry and was CEO of Sentrachem from 1991 to 1998. Executive director of Sappi until 2005. Served on a number of boards including Sappi, Telkom Armscor and Denel Industries, Hudaco Trading and Itisa. Chairperson of SVA Architects
Founder of the Wallflower Group, which is a business started in August 2016 to build up interests in the real estate, food/aquaculture, healthcare and education sectors
Former Group Five CEO from 2007 to November 2014
Nominated by PIC:
67% 61% 74%
Financial and investment background including holding various top leadership roles at Sanlam. Nonexecutive director of Sphere Holdings
Nominated by Mazi Capital:
Has a background in engineering and project management. Executive chairman of Phumaf Consulting Engineers
Keneilwe Moloko stepped out of the running for directorship at the extraordinary geneal meeting
Group Five nonexecutive directors that resigned this week:
Vincent Rague Asset manager Allan Gray’s mass sweep-out of construction company Group Five’s black-dominated board at a rancorous extraordinary general meeting has left CEO Themba Mosai facing an uncertain future just two months after taking over.
Mosai, who was announced as the interim group CEO in May after former CEO Eric Vemer resigned in February, held nothing back when asked to give an update on the company’s business following the publication of a trading update this week.
The update showed that the company would report a major loss in the year ended June, after posting a profit in the previous year, because of a deteriorating environment and the payment of a regulatory fine for collusion.
“Anyone who opposes transformation in a country where the majority of the population remains at the margins of economic participation, does not understand the market,” he told the extraordinary general meeting.
“It is a sick society where the majority has to create laws to protect itself against the minority. It is a sick society where perceptions of competence are apportioned on the basis of pigmentation.
“Judge us on our results, our performance, and not the tone of our skin colour. Let me run my race, let me complete my marathon and then you can judge me – not before, as this is called prejudice.”
Pressed on whether Allan Gray would support Mosai, given his critical remarks at the EGM and the strategy he had outlined, Allan Gray portfolio manager Leonard Kruger said: “It is too soon to say. He made a statement in support of the outgoing board, which we disagreed with. But he has an excellent opportunity to rebuild the team with the support of the new board.
“We will give him the time and space he needs. It will be, to a large extent, at the discretion of the new board. We will take our guidance from them.”
Kruger denied the fund manager was anti-transformation. He pointed out that three of the company’s five nominees were black and insisted that all Allan Gray sought and would demand from the incoming board was industry experience and the ability to deliver value for all investors.
“It is complete nonsense that we are anti-transformation,” Kruger told City Press after the EGM.
“We are not pushing for unbundling. We hope the new board will take appropriate action to take the company forward, which is in the interests of all shareholders.”
Before this week’s historic vote Mosai, outgoing Group Five chairperson Philisiwe Mthethwa and independent directors Justin Chinyanta and Kalaa Mpinga took turns to denounce the conduct of Allan Gray and Coronation Fund Managers, accusing the shareholders of apartheid-era collusion that saw them kick out a black-dominated board to frustrate transformation.
Allan Gray, Group Five’s largest shareholder with 25%, and Coronation with about 14.49% ownership, proposed that Group Five unbundle the company’s lucrative investments and concessions business in April, leaving the unprofitable engineering and construction business. It suggested the proceeds should be distributed to shareholders.
City Press has seen a copy of the letter.
Any major unbundling or sale of Group Five assets would require the approval of 75% of the company’s shareholders.
“These guys are basically trying to take us back to the old South Africa – doing deals in private white clubs,” Chinyanta told City Press.
“If we had agreed to Allan Gray’s strategy, what would have been left is the engineering and construction business, which is a dog. That is what they wanted to give the blacks. It is not an equal playing field.”
Mthethwa was equally forthright in her closing remarks after the eventual election of eight new nonexecutive directors – up from the five initially proposed by Allan Gray.
“I hope that this has been a lesson for all shareholders, large or small, that the interests of a company should be decided by all shareholders and not only by those significant shareholders with deep pockets,” she said.
“I believe this outcome – of a more diverse group of nonexecutive directors than what was originally mooted by Allan Gray – is a success for shareholders.’’
All five of Allan Gray’s director nominees were elected at the EGM – with the Public Investment Corporation, which holds about 20% of shares, getting in two. Mazi Capital got its lone nominee in. However, an analysis of the voting showed up divisions, with a number of directors receiving strong opposition to their election.
Mazi Capital’s Edward Williams bagged the lowest support of all the directors as 42.27% of shareholders present voted against him. Mike Upton, the former Group Five CEO who was nominated by Allan Gray and has been mooted as the next chairperson, got just 61.16% of voting support.
Kruger admitted that Allan Gray had voted against some of the proposed directors because it felt a board with eight non-independent directors was too big for a company the size of Group Five.