Boardroom politics and reshuffling happen all the time, usually because of personal differences or conflicting strategic visions. In the past two years there have been numerous chief executives who have resigned for “personal reasons” or “to spend more time with the family”.
These reasons are often used as euphemisms by executives who no longer see eye to eye with the rest of the board. Yet most of these do not capture the headlines in quite the way the resignation of Peter Moyo from Alexander Forbes has done.
The company has been accused of putting a white executive chair-person in place to babysit a black chief executive. Moyo’s departure came after the financial services company was bought out by London-based private equity player Actis and delisted from the JSE.
Although it is normal practice for a private equity shareholder to put some of its own people in key positions and to appoint a chairperson, it is unusual to appoint an executive chairperson.
This contravenes sound corporate governance principles that separate the roles of chairperson and chief executive, with the latter holding the executive power.
Actis says the issue has its basis in a decision it made two-and-a-half years ago to recruit Bruce Campbell, then at Mutual & Federal, to lead its takeover bid of Alexander Forbes.
Nkosana Moyo, a partner at Actis, says Campbell was recruited because the existing chief executive, Rael Gordon, was based in London.
“It was our view that a company with the prominence of Alexander Forbes within the South African market should have its chief executive resident in South Africa. We had commissioned a global search for a potential successor to Rael and identified Campbell, managing director of Mutual & Federal.”
Nkosana Moyo says rather than replacing Peter Moyo, Actis felt that the combination of experience of both Campbell and Peter Moyo provided a complementary skill set that would benefit the company.
He says Actis appointed Campbell as executive chair because his involvement in the company needed to be fairly extensive, given the additional demands on senior management under the new ownership structure.
Actis says the decision was not considered a demotion for Peter Moyo, who would have continued in his role as chief executive with the same reporting lines and responsibilities. It might have made more sense to come to a settlement with Peter Moyo rather than create this conflict, but perhaps Actis understood the value of a competent, skilled black chief executive and wanted to keep Peter Moyo on in his role, as well as tap into the experience of Campbell.
Following Peter Moyo’s resignation, Actis discussed the possibility of Sello Moloko joining the group as chief executive. It had already been talking to Moloko about joining the board. Nkosana Moyo says Moloko declined because of his commitments to Thesele, his investment company. He was offered a position of executive chair, but felt that this would require a similar time commitment.
“We then asked Bruce to assume the chief executive role and Moloko agreed to take on the chairmanship of the company,” says Nkosana Moyo. Moloko has commented that he did not see the need for an executive chair position given the role of the chief executive.
Moloko might have known that two managers with overall executive responsibility would not work. Some have said that Campbell should have applied his mind to the issue before accepting the position of executive chair.
Jimmy Manyi, deputy president of the Black Management Forum and head of corporate affairs at TigerBrands, has criticised the way the issue was handled.
He argues that Actis should have taken a position up front and either paid Peter Moyo a parting package and replaced him with Campbell as chief executive or changed the agreement with Campbell. Manyi describes this as an “elegant solution”.
He says the decision to create the position of executive chair crossed corporate governance rules and created the impression that Peter Moyo needed a babysitter.
He argues that if Actis wanted to retain both men, it could have put Campbell in a non-executive position where he could have used his experience to guide Peter Moyo rather than get involved in operations. “Having a chief executive with a hands-on chair is a collision path,” says Manyi.
The question is whether Campbell would have been happy with this arrangement, having given up the position of chief executive at Mutual & Federal for the Alexander Forbes job. Manyi believes that Actis’s being now prepared to accept a non-executive chair in Sello Moloko sends the message that it was not comfortable to leave the reins in Peter Moyo’s hands, despite its vocal support of him.
Actis refuses to comment on the details of Peter Moyo’s departure or the reasons for it. It will not disclose whether he was paid a farewell package, except to say that the board employed considerable efforts to try to get him to stay and that the terms of his departure were mutually agreed.
Peter Moyo seems reticient to discuss the issue.
Manyi, as a leading critic of Alexander Forbes’s handling of the matter, says that had Peter Moyo had been white the company would have opted for an elegant solution.