Shareholder activism on the march
January 28, 2007
By Mzwandile Jacks
Johannesburg - The vicious attack by the Public Investment Corporation (PIC) earlier this week on Barloworld for not having black executive directors did not come from nowhere - it is the programme of action hatched late last year by the Government Employees Pension Fund (GEPF), the power behind the PIC's throne.
And had Barloworld, the diversified industrials group, and its executive management paid attention, they would not have had to deal with the wrath of the PIC and losing their chairman, Warren Clewlow, in the manner they did this week.
Martin Kuscus, the recently appointed chairman of GEPF, in an interview published in the Business Report late last year, said the R600 billion GEPF would no longer be a passive investor on the JSE, but would ensure that companies would need to strive to meet their economic, social and environmental objectives.
"Right now, we are working on a social responsibility investment [SRI] policy. No less than 100 percent of our assets must be invested on an SRI basis," Kuscus said at the time.
In a fundamental departure from the past, when the sole GEPF trustee was the minister of finance, it now has a 32-person board representing stakeholders. And for the first time, the fund has a chief executive, Phenias Tjie, who was appointed by the representative trustees.
There is also talk that some companies with no black executive directors, which have PIC as a shareholder, will also soon feel its wrath, and that executive remuneration will also come under serious scrutiny.
PIC is a shareholder in 126 JSE-listed companies. At the top of the list are Imperial (20.8 percent), Aveng (20.5 percent), Supergroup (18.3 percent), Telkom (17.9 percent), AVI (17.2 percent), Sasol (17.1 percent), Lewis (16.2 percent), Steinhoff (16 percent) and JD Group (15.6 percent).
The chief executive of the PIC, Brian Molefe, in what many said did not bode well for Barloworld, said he found it strange that 13 years into the new democracy the company had no black executives. The PIC is the largest shareholder in Barloworld with a 17 percent shareholding.
He made this statement in the week in which Barloworld held its annual general meeting (AGM).
The AGM saw Clewlow resign as chairman and Isaac Shongwe appointed chief executive director of Barloworld Logistics Africa. Shongwe will join the Barloworld board as an executive director.
Lawyer and former political activist Dumisa Ntsebeza was appointed interim chairman.
Analysts said that what happened at Barloworld this week was a continuation of shareholder activism, which also affected the petrochemicals giant Sasol in the past. Sasol also did not have black executive directors.
"Shareholder activism is not about compliance with BEE codes. It is where shareholders use their unique powers as company owners to facilitate change. It is essentially a mechanism by which asset owners can hold the boards of companies accountable to shareholders," said Kuscus.
|
|
