The eight new non-executive directors appointed to the Group Five board at Monday’s extraordinary shareholders’ meeting are faced with the prospect of releasing the details of losses notched up by the company in the year to June.
Monday’s meeting marks the first time a shareholder of a large listed company has successfully used the new Companies Act to replace all the non-executive directors on a board.
On Monday, just hours before the meeting was to start, the company released a trading update advising shareholders it would report a loss of at least 590c a share for the year.
The drastic turnaround from 335c headline earnings a share reported for financial 2016 reflected a combination of the deteriorating operating environment, the R255m socioeconomic contribution to accelerate transformation it was required to pay following the competition authorities’ findings and the recognition of the final settlement of a contract, which reduced operating profit by R244m.
The new slate of non-executive directors contains only one who has Group Five board experience, Michael Upton, who was CEO from 2007 to 2014.
Another concern is that the CEO is relatively new to the board. Thembe Mosai was appointed in May. He has been with the group for 13 years.
All former non-executive board members were forced to resign as a result of fund manager Allan Gray’s bid to reconstitute the board in terms of section 61 of the Companies Act. Allan Gray said it had pushed for the extraordinary meeting because it had lost faith in Group Five’s board. After several high profile resignations earlier in 2017, the fund manager, which holds 25% of Group Five, said that it did not believe the board would act in the best interests of all stakeholders.
Each of the eight candidates who were nominated by the shareholders secured more than the minimum 50% votes needed to be appointed to the board. Five – Jackie Huntley, Nazeem Martin, Nonyameko Mandindi, John Job and Upton – were nominated by Allan Gray. Huntley received support from 99.3% of shareholders; Martin received 66.7%; Mandindi 97.7%; Job 74.4%; and Upton just 61.2%.
Cora Fernandez with 65.1% backing and Thabo Kgogo with 95.7%, nominated by PIC, were also voted onto the board. The eighth board member was Edward Williams, nominated by Mazi Capital, with 57.7%.
Allan Gray said its nominees would ensure a more transformed board that had relevant expertise, industry experience and institutional memory.
Source: Business Day