Whole MMI committee should get the chop

MMI Holdings’s succession plan, which involves dragging in someone from the past to take over as CEO, is unusual but unfortunately not unique. That it was deemed necessary by Rand Merchant Investment Holdings (RMIH) is surely sufficient proof that all four members of the MMI Holdings nomination committee should be shown the door with CEO Nicolaas Kruger.

Johnson Njeke, Peter Cooper, Frans Truter and Louis von Zeuner are the four directors on the nomination committee. They are the four directors whose job it is, the MMI annual report reads, to make recommendations to the board on the appointment of executive and nonexecutive directors and ensure “that appropriate consideration is given to succession planning for key executives”.

While former Momentum CEO Hillie Meyer has an impressive track record, the fact is that the last time he was a CEO was in 2005 and that was at a significantly smaller entity.

Meyer has been appointed to replace Kruger on a three-year contract. The board now has three years to do what the nominations committee should have been doing over the past nine years, which is to identify new CEO candidates.

While the RMIH puppetmasters are at it perhaps they should also look at clearing out the remuneration committee.

The four members of that committee are Cooper, again, Jabu Moleketi, Ben van der Ross and Johan van Reenen. These are the guys who in 2017 thought it would be a great idea to give Kruger and a few of his colleagues a one-year-noperformance-needed retention payment. The only condition was that Kruger remained employed until end-June 2018.

The payment was one of the reasons 52% of shareholders other than RMIH voted against the remuneration policy.

Another issue that irritated shareholders was the committee’s habit of awarding generous loss-of-office and restraint-oftrade payments.

Aweek before Christmas, SA’s premier steel maker, ArcelorMittal SA confirmed it would pay off R1.5bn in Competition Commission penalties over five years. But it also said that it could not make full payment of R300m per annum for 2017. This instalment had been due in November. Instead, it had approached the competition authorities and reached agreement subject to confirmation by the Competition Tribunal to divide the 2017 payment into three tranches of R100m each.

It says the Competition Commission has taken into account the company’s dire financial position, resulting from the tough trading conditions in steel globally and domestically.

So, now it is waiting for the tribunal to confirm that and the next two instalments will be made in April and July. But the revised payment terms apply only to the first year of the agreement. Thereafter, the instalments will remain as agreed, it says.

So, the question is, will this cost the company R500m in 2018? One shudders at the thought and the effect on its already diabolical recent results.

ArcelorMittal SA says it is firmly committed to the longterm sustainability of the South African steel industry and is encouraged by the government’s support. The group had also said in November 2017 it welcomed the Department of Trade and Industry’s decision to designate minimum thresholds for local production and content in the railway sector.