When CEOs are unseated, we should look to the chair
Last year mining giant Rio Tinto’s then CEO Jean-Sébastien Jacques and two executives were forced out by an investor backlash over the company’s destruction of Aboriginal people’s sacred sites in Australia to expand its flagship iron ore mine. Last month Rio Tinto’s chair, Simon Thompson, took the fall for the fiasco too, saying he would step down in the next year.
Don’t hold your breath for anything like that in SA. Chairs and boards of SA’s big companies have it easy when it comes to hiring and firing.
Take Sasol. When joint CEOs Bongani Nqwababa and Stephen Cornell had to take the fall for delays and cost overruns at Lake Charles, nobody suggested well-paid chair Mandla
Gantsho or any board members who’d supposedly exercised oversight over the project should be held accountable.
When African Bank CEO Basani Maluleke was suddenly forced out following a spat with chair Thabo Dloti, did anyone suggest the fault might (also?) lie with the chair, who himself had quit his position as CEO of Liberty Group after three years, apparently because of a falling out with the board over strategy.
Old Mutual’s long and litigious dismissal of
CEO Peter Moyo was arguably a bit different because he broke the rules, but even then it wasn’t clear why chair Trevor Manuel didn’t take more responsibility for the spectacularly clumsy way the board handled that saga.
When AngloGold lost CEO Kelvin Dushnisky after just two years, the spotlight was on him and his sign-on bonus rather than on chair Sipho Pityana, who did in fact step down without any explanation a couple of months later — but will surely be keeping busy at Absa, where he is now deputy chair, presumably with aspirations to be the next chair.
And then we have Absa itself, whose chair, Wendy Lucas-Bull, has pulled off the remarkable feat of losing two CEOs in just over two years.
After 10 years at the helm of Absa, Maria Ramos suddenly remembered her 60th birthday was coming up. Or so we were told. Daniel Mminele lasted just 15 months before he was forced out, over what we were told were “divergent professional views”, not to mention a failure to align on “the culture transformation journey” and a jumble of other obfuscations that suggest this was more about personality clashes and incumbents defending their fiefdoms.
Not that such battles don’t happen in the best organisations, but a wise board is supposed to manage these — particularly when it recruits a CEO from outside the organisation, who inevitably will bring disruption and could face pushback. If the board isn’t looking for a fresh approach, why recruit an outsider, particularly one of the stature of former Reserve Bank deputy governor Mminele, who Absa had had on its list to replace Ramos at least as far back as 2016?
The new CEO should be able to make their mark on the organisation, confident the board will back them to the hilt. They may come up against hostile executives; they should not have to come up against a hostile board. That is crucial when the new CEO comes from a different environment and is on a steep learning curve. The role of the chair and board is to give them air cover, to hold the CEO’s hand, metaphorically speaking, and make sure they succeed.
Nobody should be doing anything to undermine confidence in banks or their leadership, given how crucial public trust is for institutions that hold the public’s deposits. But shareholders in any company that suddenly and unaccountably parts ways with its CEO should take a long, hard look at the board and ensure it is held accountable. Lucas-Bull has said her board will “introspect”. But introspection is not the same as accountability.
Former JSE CEO Nicky Newton-King used to point out that “chairman” was not a gendered term. It comes from the Latin manus, meaning hand. When things go so horribly wrong between a company’s board and its new CEO, it is, in other words, by the hand of the chair and deputy chair.
Perhaps the Absa debacle might at least prompt a new and more vigilant approach to company chairs and their boards.