Executive exodus at JSE-listed companies

At least 41 CEOs and CFOs have resigned from JSE-listed companies in the past 21 months due to South Africa’s difficult operating environment and a shift from a shareholder-centric to a stakeholder-centric business environment.

Brand reputation management advisor and DonValley MD Solly Moeng told Kaya Biz that CEOs, especially in South Africa, face a challenging operating environment.

This year alone, CEOs from large JSE-listed companies, including PPC, Investec Bank, Spar, Anglo American Platinum, and Transaction Capital, have announced their resignations.

“The challenge for CEOs is to please everybody,” said Moeng.

“And if you are not able to please everybody and some of the people who are unhappy with you may be in the board, which also comes under certain pressure or they put pressure on you, you end up leaving.”

“Not because you’re a bad person, but because you’re not able to balance the expectations of all the shareholders or the stakeholders in the business.”

He explained that shareholders often have different expectations than stakeholders in a company.

Shareholders want to see their returns to investments in the business maximised, but in a South African context, “you also want to see transformation. You want to see the faces of the company change”.

“But we also live in a global world where companies are forced to transition from a previous shareholder-centric environment to a more stakeholder-centric environment.”

“All of these things come with a cost if you’re going to bring somebody into the business who has no experience and might need to be at the company for a while,” he said.

“There will be mistakes. There will be a need to acknowledge that the first few years might be really, really tough because the world has to get used to new things.”

This could see the CEO of a company lose the protection they need with a company board.

Normally CEOs who have been in their position for a long time have a group of people at board level who agree with them, consult with them, and are there to protect them, Moeng explained.

Once the CEO loses this protection from the board, “you’re in trouble”. He compared it to politics at South Africa’s state-owned institutions.

“You need a level of political blessing. If you don’t have it – no matter how good you are – you’re probably going to lose because those shareholders, the politicians, have got other expectations of you and some of which may be unethical, even criminal.”

Moeng said CEOs need to learn to adapt to a world where their boss is no longer the person who pays their salary but other people as well.

“And to please all the other people, you’ve got to take something from the boss who pays your salary, who only wants to see the shareholder returns maximize all the time.”

In addition to this pressure, South Africa has a very difficult operating environment.

JSE-listed Italtile recently told shareholders that it failed to achieve its goals to gain market share and improve profits in its South African businesses due to load-shedding, rampant crime, increased competition, and high inflation and interest rates.

Sibanye-Stillwater, another JSE-listed company, also recently lamented the operating environment for South African miners.

The company said the environment for these companies is regressing due to ongoing load-shedding, the deteriorating quality of public services, and increased organised crime.

While this plays a part in a company’s performance, Moeng said that for a good executive, “adaptability is key”.

“Of course, you need the basic technical skills, you need to be able to communicate, you need to navigate the world of the stakeholders, but if you end up running short elsewhere, you don’t make it.”

“That dynamic in South Africa is very important. The economy has been suffering for a long time and many companies cannot meet their target in terms of profit and therefore the shareholder benefits.”

“This also puts a lot of pressure on CEOs as it’s very hard to have a CEO who comes in and says, ‘Sorry guys, we can’t help it this time because it’s really bad out there.”