In a bid to calm shareholder jitters about the protracted punch-up between Old Mutual and its axed CEO, the insurer has fired Peter Moyo for the second time.
Old Mutual issued an open letter to shareholders on Thursday, saying that it has given Moyo a further notice terminating his employment contract with SA’s second-largest insurer – effectively firing him again.
The insurer’s letter comes at a time when the Johannesburg high court is expected to make a ruling next week on whether Moyo can get his job back because Old Mutual is appealing a recent judgment by the same court that paved the way for him to be reinstated as CEO.
“It is clearly in the best interests of the company and its stakeholders that the employment relationship with Moyo should come to an end,” Old Mutual said in its letter to shareholders.
Since Moyo was suspended on May 23, hours before the Old Mutual annual general meeting, due to “a material breakdown in the relationship of trust and confidence”, shareholder value has been eroded. Old Mutual’s share price has fallen by 15% to R18.31 a share (close on August 21) since Moyo was suspended on 23 May – wiping off more than R17 billion on its market capitalisation.
Old Mutual subsequently fired Moyo on June 18, accusing him of wrongfully pocketing dividends worth R30 million linked to NMT Capital, an investment holding company co-founded by Moyo, and in which Old Mutual holds a 20% stake.
Old Mutual’s largest institutional shareholders including Allan Gray, Stanlib and Prudential Investment Managers have engaged with the insurer’s board, led by chairman Trevor Manuel, to find a resolution to the impasse involving Moyo.
Allan Gray, Old Mutual second-largest shareholder after the Public Investment Corporation, said it doesn’t believe the insurer’s relationship with Moyo is workable due to the “severe breakdown in their relationship”. The Cape-Town based asset manager, which has a 10% shareholding in Old Mutual, wants Moyo to walk away from the insurer without a financial settlement.
Moyo’s lawyer Eric Mabuza said the former CEO was issued with a letter from Old Mutual on Wednesday evening that terminated his employment contract with the insurer. Mabuza has described Old Mutual’s move as “corporate madness” and “goes beyond anything we have seen in our lives”.
“How can you fire a CEO twice? What employment contract are they terminating again? They have already issued Peter with a termination letter in June. Someone has to intervene to save Old Mutual from itself. The company is self-destructing,” he told Moneyweb.
Mabuza added that the move by Old Mutual is a “circus” because the insurer did not wait for the outcome of ongoing court proceedings before it issued Moyo with a termination letter.
On July 30, the high court ruled that Moyo should be temporarily reinstated as CEO and blocked Old Mutual from appointing his successor. The insurer is appealing against the ruling.
Old Mutual believes that it doesn’t have to comply with the ruling to reinstate Moyo as CEO because it is in the throes of appealing the ruling. It has asked the high court for a declaratory order to affirm its belief.
However, Moyo launched a counter application, asking the high court for an order to declare the conduct of Old Mutual’s 14-member board to be in contempt of court for “failing” to comply with a ruling that reinstated him as CEO. The court is expected to make a ruling on all the order applications next week.