So the prospect of running Liberty through one of the toughest periods in the history of the life industry did not prove sufficiently appealing to Myles Ruck, who recently resigned as CEO, followed by his second-in-command Ian Kirk.
Ruck, who headed up Standard Corporate and Merchant Bank before moving to Liberty Life in 2003, has undoubtedly accumulated a large nest egg. He is 52 and wealthy enough not to have to work. According to Liberty’s 2004 annual report, Ruck was paid a total of R8,6-million. He also had a total of 366 000 share options issued in two tranches in 2003 and 2004. At Wednesday’s closing price of R90 a share, they carried a profit of R14-million, although they respectively vest in 2009 and 2010.
If he stays he would have to see Liberty through a turbulent phase, with massive reform proposals on the table for the pension and retirement industry. Who can blame him for not signing up?
The resignation of Kirk probably spooked the market because this was seen as a team leaving, which could indicate wider issues. Previously CEO of Capital Alliance, which Liberty acquired in March last year, Kirk was brought in as part of Ruck’s team to oversee the integration of Capital Alliance’s operations with Liberty.
There is concern that the men will not see this through. “A lot of the work has been done but there is still some integration that needs to be completed and the benefits are still to be delivered,” says Chris Steward, portfolio manager at Investec Asset Management.
Kirk could have personal reasons for his decision. With the announcement that Bruce Hemphill, CEO of Stanlib, would be replacing Ruck, Kirk must have realised that his chances of ever getting to be CEO were gone.
While analysts say it is too soon to give a verdict on Ruck’s performance, he does seem to have carried out the tasks set for him. Liberty’s share price has doubled since he took over the reins three years ago and Steward says he has turned around the operational side of the business. There is a good chance that a special dividend will be paid out to shareholders at the next results.
According to a banking analyst who asked not to be named, Ruck was sent in as a hatchet man by Jacko Maree, CEO of Standard Bank, to turn Liberty around. “Ruck is Jacko’s lieutenant and he sent him in to sort the business out.” Ruck is known as a tough boss and did not make many friends. “Have you been rucked yet?” was the joke around Liberty.
The analyst believes that the past three years have been hard on Ruck and that he went in as a fixer not a builder. Over the next few years, Liberty may need a different type of personality to build the business. He also believes it will be impossible for Ruck to return to Standard Bank as he has been out of the fold for three years.
With regards to Hemphill’s appointment, Steward believes he could be the right person for the job as he has a strong background in investment and savings. The banking analyst believes Hemphill’s appointment is a classic Maree move in selecting a Standard Bank loyalist to head the Liberty Group.
At the end of 1999, when Donald Gordon sold his stake in Liberty, Standard Bank increased its holding in the Liberty Group through its holding in Liberty Holdings. It has a more than 50% stake in the holdings group, which provides it with a 28% stake in Liberty Life. This gives Standard Bank effective control over the life assurer. Standard Bank has thus ensured that its top people have moved into key positions at Liberty. This relationship has proved very lucrative for Standard Bank, according to Steward, as it owns the customer relationship. Standard Bank has very favourable third-party agreements with Liberty, whose products are sold through the Standard Bank distribution network.