Absa’s annual general meeting turned out to be something of a damp squib last week with not even the remuneration votes garnering much opposition.
In the weeks running up to the meeting there was growing talk of a shareholder backlash against the board because of its handling of former CEO Daniel Mminele’s departure. In April Mminele shocked the banking community when he announced he would be leaving the group at the end of the month.
Chair Wendy Lucas-Bull was reported to have been involved in near-constant engagements with shareholders during those weeks; a fact that might have helped to ensure the AGM ran smoothly.
It might also have helped that Lucas-Bull, who has been chair since 2013, reminded shareholders early on in the meeting that she would be stepping off the board at the end of the year. Lucas-Bull was appointed chair of Shoprite in November 2020.
But little emerged from the meeting that would have encouraged shareholders to hope that Absa’s leadership was now on a firmer footing.
Even Lucas-Bull’s pending departure will not help much. As shareholder activist advisor Active Shareholder notes in its voting recommendation for the meeting, the average tenure of non-executives on the Absa board is just over three years and only five directors have served for five or more years. One of these five directors retired at the AGM and the second, the chair, retires at the end of the year.
In addition, the acting CEO is not only the fourth in the role in as many years, but has only served at Absa for four years.
Read: Mminele exit: Absa board faces serious questions (Apr 21)
The evident lack of succession planning at both non-executive board level and executive level was raised by Zwelakhe Mnguni, chief investment officer of Benguela Global Fund Managers, who pointed out that the banking group is relying on both an acting CEO and an acting CFO.
“Can you please provide some perspective on why the business was not able to make an immediate appointment of a successor to Mr Mminele especially given that the board had repeatedly stated in the past that succession planning is in place within the group.
“Does the fact that we have both an acting CEO and acting CFO not show that there was inadequate succession planning?”
Lucas-Bull explained, without much conviction, the reason a permanent successor has not been appointed is because Mminele’s departure was unexpected.
Read: How succession should (and should not) be done (May 10)
If the meeting had been in-person and not virtual, Mnguni might have had an opportunity to ask a follow-up question pointing out that the great advantage of succession planning is that it enables the board to deal expeditiously with unexpected events. As it is, Lucas-Bull’s unimpressive response was left hanging.
“The reason for not making an immediate announcement was that in the first instance we were not expecting to have to agree to part ways with Daniel,” Lucas-Bull told the meeting in response to Mnguni’s question. “It wasn’t a planned thing, we exercised best efforts to avoid it, until we reached the conclusion that it was in the best interests of the business to part company.”
The chair also pointed out that it is important to have an appropriate process to consider the permanent appointment.
“We didn’t go out immediately with a permanent appointment because it’s important to demonstrate and go through a proper board process to finalise a permanent successor,” said Lucas-Bull, again overlooking the fact that succession planning would involve the appropriate board process.
On a more encouraging note the country’s fourth largest bank by assets did commit to being cautious in its evaluation of any proposal to fund Turkish company Karpowership’s delivery of the emergency power procurement contract it recently, and controversially, won from government.
Read: SA’s R218bn Karpowership deal faces scrutiny (Jun 3)
“We are not about to give away our reputation on one transaction,” said Absa’s acting CEO Jason Quinn in response to a question from shareholder activism organisation Just Share.
Quinn assured shareholders that Absa has not made any commitment yet and any commitment would be subject to independent legal, technical, environmental, insurance due diligences as well as credit processes.