Shareholders vote to change the board
TELKOM SHAREHOLDERS recently voted to empower the company to change its board – which freed it to add clout and add telecommunications expertise. The vote took place at a meeting specifically adjourned to enable the board to change its old articles of association and appoint an additional director – 12 instead of the 11 previously allowed for – and to fill vacancies without having to wait for an AGM to do so.
Telkom currently has the seemingly ludicrous position of a chief financial officer who doesn’t sit on its board. The amendment would enable it to change that. The group swiftly announced a new appointment days after the meeting: Peter Joubert as an independent nonexecutive. Joubert previously chaired Impala Platinum, and Afrox before that, among his other directorships.
After the most recent appointment Telkom now has 10 directors and therefore could potentially appoint another two. Only one of those – CEO Reuben September – is an executive, the remainder are non-executive.
Government, with its 39,76% stake in Telkom (otherwise known as the A class shareholder), has the right to appoint five directors. The Public Investment Corporation (PIC, otherwise known as the B class shareholder) has the right to appoint one. The PIC holds a 16% stake and is represented on Telkom’s board by its CEO Brian Molefe.
Although welcome – investors have long called for there to be more telecoms expertise – the timing of the board changes does seem a little curious, given the looming corporate action that could see Telkom selling its mobile and fixed line assets.
However, Renaissance Specialist Fund Managers’ portfolio manager Khulekani Dlamini says it’s actually well timed. “With all the potential corporate activity, it would be key to have the guy with the handle on the numbers sitting around the boardroom table.” Dlamini also says there was a stage when a number of appointments were made of people with no telecoms experience but which seemed merely Government appointees. Changing the articles of association meant an opportunity for better corporate governance, Dlamini says.
Some shareholders were disappointed to see highly respected former Massmart CEO Mark Lamberti resign from the Telkom board in June this year after a year of service. But Lamberti told Fin24 on his departure that there was nothing sinister in his stepping down: he’d simply decided to do something to serve his country but had never intended to continue indefinitely.
Lamberti says during his tenure Telkom had made a lot of progress in transitioning from a public utility to a fully-fledged listed company. Asked whether the board functioned effectively, Lamberti says it recognised there was an imbalance between the number of independent and non-independent directors, as well as a skills imbalance, but it was working hard to change that.
The recent changes are evidence that Telkom is doing as Lamberti said it would.
Changes are well timed. Khulekani Dlamini