Three months after achieving straight As in his performance review as CEO of Johnnic Communications, Connie Molusi was suspended on full pay ”pending the outcome of the hearing to consider his performance”, according to a statement released by the group recently.
Molusi cannot make sense of it. Nor can Johncom’s major shareholders. Since Molusi took over as CEO in 2003, Johncom’s share price is up nearly 300%, and earnings per share are up 5,6-fold.
The consumer spending binge played its part, but Molusi claims with some justification that if the buck stops at the CEO’s desk, then he surely deserves at least some of the credit for this performance.
”How can it be that three months after my performance appraisal, where I got the highest possible rating, I am suspended pending a review of my performance? It’s bullshit,” says Molusi, who adds that it is well known he and Johncom chairman Mashudu Ramano did not get on.
He adds that he did not have the same difficulties with other members of the board. ”They did not even have a board meeting when they suspended me,” he says. ”I have an employment contract and am taking legal advice on what to do next.”
What is going on at Johncom? There has been talk that Ramano wanted the CEO job, and Molusi believes there may be some truth in this. Another theory is that Ramano was keen to conclude a black economic empowerment (BEE) deal with BEE oligarchs Tokyo Sexwale, Patrice Motsepe and Cyril Rama-phosa, but that Johncom editors were opposed to such a deal.
A complicating factor is the tie-up with Caxton and CTP Publishers, in which Johncom has a 38% stake. Caxton has long-standing ties with Johncom. It prints and distributes some of its titles, in addition to publishing a number of its own papers and magazines, such as The Citizen, Bona and People.
Both Caxton and Johncom need BEE partners, but Caxton could short-circuit this process by merging the two operations and piggybacking on Johncom’s BEE status once it secures its long-awaited BEE deal. This lends weight to the theory that Molusi is being despatched to make way for Caxton CEO Terry Moolman to take over as CEO of the merged entity.
Johncom said in a statement this week that Molusi’s suspension was not related to talks about an empowerment transaction ”or any other potential transaction involving Johncom”. Molusi was reportedly against any talk of a merger with Caxton, though he was keen to conclude a BEE deal.
Abdul Davids, senior analyst at Allan Gray, which holds about 30% of Johncom and 17% of Caxton on behalf of clients, says the firm has not been informed of the reasons for Molusi’s suspension, other than what has already appeared in the press. ”We are not involved in the day-to-day running of Johncom, but have indicated to management that we would like to be consulted on issues that affect shareholders.”
Coronation Fund Managers analyst Gavin Joubert says Johncom’s performance over the past three to four years ”has been very good, and part of this must be due to Connie’s leadership”.
As major shareholders, Allan Gray and Coronation would expect to be given an opportunity to pass judgement on any BEE deal or merger contemplated by Johncom. So far, no such deal has been tabled, though behind-the-scenes talks on the group’s BEE options are understood to have been in progress for months.
Davids says Allan Gray would assess any proposed deal on its merits, whether or not it involved high-profile BEE players. ”We look at it from the point of view of value creation for shareholders,” he says.
Johncom’s media assets include the flagship Sunday Times, 50% of BDFM (which owns Financial Mail and Business Day), Sunday World and Sowetan, and various other papers and magazines. Other brands include Nu-Metro, Map Studio, Gallo and Exclusive Books.