Planning to cut and to grow
The company hopes to gain the highest boost from East Africa and is determined to get a foothold in Ghana and Nigeria
Old Mutual lobbied hard for its shareholders to accept its managed separation, which was approved barely a month before the proposed split into two listed entities — the Uk-based Quilter listing on Monday June 25 and the Africabased Old Mutual Ltd on Tuesday June 26.
Somewhat bizarrely, Old Mutual Plc will become a subsidiary of Old Mutual Ltd, though it will remain a British company with board meetings in London. And the liabilities connected to the failed Bermuda operation remain on the books.
It is easy to forget that the life office originally started buying operations overseas as it acknowledged that it was a mature ex-growth business in SA.
Incoming CEO Peter Moyo admits that a large part of the job will be defending market shares in SA in its traditional strongholds of corporate business — where it is considerably more profitable than its competitors, thanks to its large smoothed bonus book.
Moyo first came into the executive suite through the corporate division, though he did not take an office among the fat cats on the fifth floor but turned an unused storeroom into a makeshift office.
He was a good choice for the CEO’S job, if only for his unpretentious, hands-on approach.
At least he will have power as well as responsibility. His remuneration will be determined exclusively by the success of the “new” Old Mutual, without the distractions of the US life businesses or UK wealth managers.
His basic package of R8.2m looks fair, especially next to the R6.3m to be paid to nonexecutive chair Trevor Manuel, who did not bother to turn up for the prelisting analysts briefing in May.
It is also an anomaly that Ingrid Johnson, the outgoing finance director, will be paid almost £1m simply to babysit incoming finance director Casper Troskie.
Moyo believes Old Mutual has developed the right mix of short-term and long-term incentives. Targets include cost efficiency, with R1bn of savings by the end of 2019 being aimed for, and improving net inflows. For example, meeting the cost target makes up 20% of the shortterm incentives, net client cash flow another 20%, new business 10%, and stemming outflows a further 10%.
The long-term incentives, a broader share ownership plan and a long-term incentive plan for senior management will start paying out in 2020 and focus on total shareholder return and the return on NAV, but 25% of it will still be driven by the success of meeting the cost target.
So Moyo needs to grow the asset base of the business while at the same time making it leaner and more efficient. With its large legacy head