PIC wants meeting with Absa over its choice of new CEO
THE PUBLIC Investment Corporation (PIC) has requested an urgent meeting with the Absa Group board following the appointment of a white man, Arrie Rautenbach, as its new chief executive.
On Friday, the PIC voiced its disappointment with the appointment, saying that the appointment of a black person could have promoted transformation in the group.
The PIC said in its correspondence with the board, that the appointment was a missed opportunity for the board to publicly demonstrate its commitment to “purposefully transform the banking group and advance diversity, inclusivity, and racial and gender equity, at the most senior levels of organisation”.
“As a significant shareholder, the PIC had previously recorded its disappointment to the board about the apparent instability at the executive level following the departure of its former chief executive (Daniel Mminele) in April, 2021 – a long-awaited, black senior hire, who purportedly had divergent professional views and approaches to that of the board,” the PIC said.
The PIC said it had expected that the board would have placed the required focus on transformation in the process to recruit a new chief executive.
“This should be a key business risk for the board, considering the nature and breadth of services Absa provides to South African society,” the PIC said.
The PIC wants initiatives to advance transformation in large corporations that should expressly be linked to incentive structures of the organisation, with a significant weight accorded to the executive and senior management to ensure that the requisite commitment and accountability take full effect in practice. “Transformation should be a core strategy of the bank, driven from board-level. This should incorporate a clear commitment, with clear targets for all levels of management,” it said.
Absa announced the promotion of Rautenbach, a 25-year veteran at the company, from the position of head of its retail and business bank, last week.
Rautenbach fills a vacancy after the unexpected departure of Mminele 11 months ago. Mminele was with the bank from January 15, 2020, until April 20, 2021. He was its first black chief executive. In a statement to Business Report, Absa said the PIC was an important stakeholder not only to Absa but to society. “We take their concerns seriously and will continue to engage them constructively,” the bank said in its response.
The bank said when appointing Rautenbach, the board was clear in its reasons, which included Rautenbach’s track record in business performance and his ability to deliver on group objectives.
“Furthermore, Rautenbach has a demonstrable track record of appointing diverse teams at the bank, both in terms of race and gender. The team that he most recently assembled in retail and business banking led to the commercial turnaround of the group’s largest business unit,” it said.
Both Rautenbach and the board were fully aligned on the principle of driving transformation across all levels within the group, Absa said.