Mutual, Moyo feud splits support

Old Mutual shareholders are split on whether the insurer should pony up and settle with CEO Peter Moyo or run the risk of a R250 million damages claim.

All Weather Capital is up for a settlement if it will end the feud.

Allan Gray, Old Mutual’s second-biggest investor, is against the idea.

Sanlam Investment Management wants to wait and see how the court process unfolds, while Prudential Investment Managers reckons a payout of that magnitude would be “egregious”.

Moyo fired the salvo when he issued Old Mutual with a summons seeking damages if he can’t get his job back. The 174-year-old firm shot back, saying it will vigorously defend any claim, and that it was correct to dismiss the CEO.

The battle spilled into the open when Moyo was suspended toward the end of May and then fired three weeks later, which he successfully challenged in court as being unfair.

“We are not opposed to a R250 million settlement if it achieves an expedited closure to this unfortunate and costly dispute,” All Weather Capital Chief Investment Officer Shane Watkins said in response to emailed questions.

The board should then independently re-evaluate whether Trevor Manuel should continue as chairperson, he said.

“The board has handled this matter appallingly and changes are necessary and desirable,” Watkins said. All Weather Capital holds about R300 million of shares in Old Mutual.

While Prudential Investment Managers, which owns 4% of Old Mutual, would prefer an out-ofcourt settlement to a long legal process with “uncertain outcomes,” the price is too high, said the company’s head of equity Johny Lambridis.

“It appears particularly excessive in a society like ours that is plagued with inequality,” he said.

Allan Gray, which holds 10% of Old Mutual and has consulted with the company, is fully behind the board.

“We believe company boards, as shareholder representatives, should be able to dismiss executive officers and there should be no need for cash settlements,” said portfolio manager Jacques Plaut. “The board is following the correct course of action.”

Patrice Rassou, head of equities at Sanlam Investment Management, said Old Mutual’s reasons for dismissing Moyo have not yet been tested in court, making for a difficult call on whether the parties should settle. – Bloomberg