James Moore: Corporate rules flouted by the cosy club at the top of SABMiller
After 15 years Cyril Ramaphosa is almost becoming part of SABMiller’s furniture
Outlook It seems that the drinks company SABMiller has decided to treat its critics in the corporate governance lobby in a similar manner to the way that some of its more raucous customers treat residents of British towns who are foolish enough to suggest that they might like to consider their neighbours after closing time on a Friday night.
Yes, SABMiller is breaking rules with the same sort of abandon with which the latter break windows.
The drinks company's long-standing chairman, Meyer Kahn, in post since 1999, is stepping down in favour of Graham Mackay, the chief executive who took on the role in the same year, which flies in the face of what is generally considered to be best practice.
Fear not, the company says in a letter to shareholders, Mr Mackay is the best man for the job. We've had a jolly thorough look around and he's the only chap who has the right sort of skills to do the job. Oh, and the issue of him being an executive chairman? It's only going to be for a year while Alan Clark, our marvellous MD of SABMiller Europe who will ultimately replace him as CEO, gets up to speed.
To be fair, SABMiller is not the only company to argue that global companies are unusual beasts with unusual needs which require the usual rules to be suspended. HSBC, the bank, does it too. But HSBC has been making concessions, and HSBC's board boasts a majority of independent non-executive directors who satisfy the criteria for independence laid down by the Combined Code on Corporate Governance.
The same cannot be said for SABMiller, whose governance arrangements are eccentric to say the least. For starters, it has two major shareholders – Alteria with 27 per cent and the Santo Domingo family with 14 per cent – whose representatives form a powerful bloc on the board, with the former having three representatives and the latter two.
Again, that might not be such an issue if the company had a powerful corps of non-executive directors charged with representing the interests of all shareholders in the majority. Except that it doesn't. There are a further nine non-executive directors that would put independents in the majority (just) if they were all genuinely independent. Except that they aren't.
To be considered independent a director cannot serve for more than nine years, to avoid the risk of them getting too cosy with the companies they are supposed to steward.
Cyril Ramaphosa may be a hero of the struggle against apartheid, but he's hardly setting an example of good governance when it comes to the business world. With 15 years' service on the board, he is almost becoming part of SABMiller's furniture. Ditto Miles Morland, who has been around since 1999, and John Manser, the former banker who's something of a newbie, having joined the board in 2001.
The more one looks at SABMiller's board, the more that it appears to resemble a club that is just a mite too cosy. It should hardly come as any great surprise, then, that Pirc, the corporate governance consultancy, has sharply criticised the company for its astonishing bonus schemes that last year paid "approximately 700-762 per cent of base salary".
So welcome to the best club in London or Johannesburg, Alan Clark. There's Château Pétrus with the main course, and d'Yquem with dessert after the board meeting's all done. You can have the empty bottles to lob at your critics on the way out if you'd like.
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