SABMiller-related boards still a small closed world
July 29, 2009
The UK's combined code of corporate governance discourages executive directors of large listed companies from sitting on other boards, particularly if they are the boards of large listed companies.
The code recommends there should be membership of no more than one other board. So SABMiller chief executive Graham Mackay is pushing the envelope a little on this with his membership of the boards of both Philip Morris International and Reckitt Benckiser.
However, the SABMiller board is satisfied that the duties attached to these other boards do not impinge on Mackay's commitment and ability to discharge fully his duties to the brewer.
In view of the historical ties between SABMiller and Philip Morris, namely that SAB bought Miller from Philip Morris back in 2002 in exchange for a large chunk of shares, it is easy to see why Mackay might want to be on that board.
But in the case of Reckitt Benckiser you have to look a little deeper to find what might explain Mackay's involvement in the board. And it's an involvement that's quite prominent - after all, he is the senior independent non-executive director on the board. The Reckitt Benckiser website reveals that one Adrian Bellamy is the non-executive chairman of the company.
Not many people will remember back to the 1980s, but that was when Bellamy ran Edgars in South Africa. Indeed he was one of the most brilliant - if not the most brilliant - of that retailer's chief executives.
Bellamy left South Africa in the late eighties and went on to do amazing things on the international retail stage.
But before he left, SAB acquired a controlling stake in Edgars, a stake that generated considerable returns for the beer group until it was sold off in the late 1990s.
It's a small world.
Director fee feats
Speaking of SABMiller and board positions, Maria Ramos will be missed although she was only on the SABMiller board for 10 months.
As you may recall, Remgro's Johann Rupert spoke eloquently of Ramos' excellent board contribution at last year's Remgro annual general meeting. He told shareholder activist Theo Botha that ideally he would like to be able to appoint five Maria Ramoses to his board.
Now, SABMiller doesn't even have one, which is particularly sad given the scarcity of truly independent non-executive directors on its board. Ramos left the board at the end of February when she was appointed chief executive of Absa.
For her 10-month stint she received fees of £49 000 (about R628 000), which were paid directly into a charity nominated by Ramos. This is certainly to be commended and is extremely encouraging.
But apparently not encouraging enough to persuade SABMiller chief executive Graham Mackay to do the same with the fees he picked up from his Reckitt Benckiser and Altria board appointments.
In financial 2009, he received annual fees of £92 000 from Reckitt Benckiser and $115 000 (R895 000) from Philip Morris International, which he apparently retained.
This was over and above the $10 million he received as compensation from SABMiller - an amount the UK's Pension Investment Research Consultants (PIRC) described as "excessive".
According to Bloomberg reports, PIRC has urged its members to vote against SABMiller's remuneration report at the company's annual general meeting on Friday. Even in the unlikely event that all the shareholders voted against the report, it would not affect Mackay's package unless the board agreed to make changes to it.
Statistical troubles
Statistics SA's data regularly comes in for a roasting over its quality and reliability. But when it comes to gathering some types of data, such as population statistics, South Africa presents challenges.
Many South Africans live in far flung places and even many who live close or in urban centres do not always have addresses. The births and deaths register at Home Affairs presents problems, many people do not have identity documents and within the country migration is a constant as people move between cities.
In the 2001 Census it was discovered significant undercounting had been done on farms and in informal settlements.
Andre Gouws, an economist at Afrinem, points out that international migration can also not be captured accurately. There is a lot of illegal immigration from neighbouring countries that at best can be estimated. Similarly, many South Africans simply leave the country without formally emigrating. For obvious reasons illegal immigrants do not co-operate with censuses.
For policy makers inaccurate data makes allocating funds and prioritising spending somewhat tricky. A case in point is provincial spending. According to Stats SA's mid-year population estimates for this year, Gauteng has the largest population with about 10.53 million people followed by KwaZulu-Natal with 10.45 million.
Eric Udjo, a professor at the Bureau for Market Research, says this is an area of contention: "Our research still shows Kwazulu-Natal has the largest population."
Being the biggest province means the biggest slice of expenditure and without adequate funds a provincial government cannot deliver the services required.
Gouws says population data will also provide trends and in this regard Stats SA's data is usually accurate since they are based on a base year and a number of other variables.
This means that the 2011 census, for which Stats SA is already preparing, needs to overcome the challenges of data collection and provide reliable information so the government can spend wisely.
This is even more pressing as the government's revenue collection has declined sharply due to the recession while rising unemployment means more people will rely on the state for help.
Edited by Peter DeIonno. With contributions from Ann Crotty and Samantha Enslin-Payne
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