Amcu and Lonmin are heading for high noon

ALL eyes will be on Lonmin this week to see who blinks first in the battle between the platinum miner and the Association of Mineworkers and Construction Union (Amcu).

Lonmin, the company worst hit by the longest strike on record in the platinum belt, reopened its mine on Wednesday after communicating its latest wage offer directly to employees and urging them to report for duty.

At least four people were killed this week in what police regard as strike- related violence. One victim, a 60-yearold man, was stabbed to death near Lonmin’s Saffi shaft early on Monday.

“The test case will play out at Lonmin,” said Investec analyst Albert Minassian. “Amcu is thinking if they can break Lonmin, they can force the other companies into a higher settlement too. If Lonmin, however, can get one or two shafts working, that can break the strike.”

The union saw Lonmin as the weakest link because its operations were worst affected by the strike, he said.

While about 5 000 workers attended an Amcu rally at Wonderkop Stadium this week, vowing defiantly not to return to work, perspective was needed, said Minassian.

“That is 5 000 workers out of 70 000 who are on strike. It is anybody’s guess how badly workers want to fight.”

It is understood that about 30% of Amcu members reported for duty at various Amplats mines this week, up from 23.6% the week before.

Workers have also been returning to Lonmin, with some attending training and induction this week after it reopened its mine on Wednesday. It declined to disclose attendance levels.

Impala has extended paid leave for its nonstriking workers until May 25, and its mine remains closed.

“Tactically, the best alternative, if they have the resources to manage it, would be . . . for the companies to wait another week or two for the workers to come trickling back,” said Albert Wöcke, associate professor at the Gordon Institute of Business Science.

He said intimidation would intensify until there was a critical mass of people who were returning to work.

FROM the country that brought us quarterly reporting and high-speed trading come radical proposals aimed at extending the time horizons of business executives.

The proposals include holding annual general meetings every four years — a quadrennial — instead of every year and that activist shareholders be obliged to pay the cost of their activism and reveal the full nature of their involvement in the company.

In addition, there are recommendations to change US tax policy to penalise short-term trading.

The source of the proposals is Judge Leo Strine, who was recently appointed chief justice of the Delaware’s supreme court.

Strine, who seems determined to reintroduce “long term” into the business horizon, is no ordinary judge. Before taking up the position at the Supreme Court, he was chief judge at the Court of Chancery in Delaware, where most of the US’s publicly traded companies are incorporated. That court has considerable influence in matters relating to major corporate actions, such as mergers and acquisitions.

So Strine’s proposals are worthy of consideration on at least two grounds — his extensive first-hand experience of US corporate matters and the fact that US corporate trends tend to dominate global ones.

In addition, Strine is highlighting concerns that are receiving growing critical attention, as evidenced by a wide array of parties such as the Occupy Wall Street movement, Thomas Piketty in his bestseller, Capital in the 21st Century, and Andrew Smithers in his recent book, The Road to Recovery.

These parties come from very different backgrounds, but they all are concerned about the consequences of the growing disconnect between the “real economy” and the financial industry, with the latter increasingly able to commandeer the profit and profit potential of the former.

Strine’s famed cantankerous and mercurial nature is evident in his lengthy article in the latest issue of the Columbia Law Review, much of which involves a vitriolic attack on Professor Lucian Bebchuk.

Bebchuk is the darling of activist shareholders and essentially, or at least as Strine presents it, believes nothing should be allowed to interfere with shareholders’ rights to direct the running of a company.

Evidently, Strine has had enough of activist shareholders parachut- ing into a company, demanding some change in its business strategy and then disappearing with the short-term share price gains that might have been generated by any change. He lumps activist shareholders together with what we know as fund managers and hedge funds, and makes the critical point that, as agents, the interests of this powerful group are not necessarily aligned with the interest of their clients or with those of long-term investors in the company.

“For end-user investors who depend on their portfolio’s ability to generate sustainable long-term growth, bubbles in equity prices that come at the expense of more durable and higher long-term growth are counter-productive,” he writes. “For society as a whole, further empowering money managers with short-term holding periods subjects Americans to lower long-term growth and job creation, wreckage from corporate failures due to excessive risk-taking and debt.”

For South Africans, the prospect of only being able to vote a director off a board or vote on executive pay every four years may seem like a disturbing step backwards. But, on reflection, it might be just what we need to ensure a serious level of engagement.

A corporate time frame of four or five years might ensure more effective analysis of the performance attached to executive employment contracts and would avoid the need for constant tinkering with them.

And it would surely give shareholders enough time to assess a director’s performance.

At present, directors do not get voted off boards — with the singular exception of Lonmin directors in 2012 — and even the advisory vote on executive pay has failed to promote much shareholder engagement. Perhaps, in the case of shareholder meetings, less would guarantee more.

Imagine the low level of engagement if we had general elections every year, or how jaded we would become with an annual Soccer World Cup.