Stock Talk: Laughter, tears and questions as execs quit

The trickle of executives from the hallowed halls of corporate South Africa has gained momentum and now looks in danger of becoming a full-scale flood.

This week Lonmin, Afrox and Reunert all reported the immediate or pending departure of top executives.

Lonmin's announcement that chief operating officer Johan Viljoen was leaving immediately was probably the saddest such announcement issued in the past 12 months.

It was not that he left for "personal reasons" - we hope all is well with Viljoen - it was the brevity, to the point of abruptness, of the announcement.

Maybe it was terribly brief because nobody at Lonmin knew much about him. Viljoen left AngloGold Ashanti rather suddenly in August to take up the position at Lonmin.

Not even in the mining industry can you expect to form lasting relationships after just seven months. But given the optimism expressed at the time he moved over to Lonmin, his departure should raise some concerns - or rather add to the many concerns about Lonmin.

It is unlikely that companies will ever reveal the full story behind an executive's departure but there is considerable scope to provide more details than Lonmin has without prejudicing either party. Perhaps Lonmin should have taken a leaf out of SABMiller's book and also revealed some details of Viljoen's departing remuneration packages.

Indeed, that should be the JSE's next new requirement; a listed company must disclose the details of the departing executive's remuneration package at the same time it announces his/her departure.

Trawling through those details does provide some, albeit limited, insight into the departure. But trawling through them in the annual report six or so months after the event is close to pointless.

Other evacuees

AFROX insiders might know enough to assume that this week's announcement about the departure of finance director Nicholas Thomson was inevitable after last month's resignation of MD Brett Kimber, but the rest of us will never know enough to be able to make assumptions.

Both said they were leaving the company to "pursue opportunities outside the group". Thomson took up his job in 2012, around the same time that Kimber was appointed as MD.

Thomson's departure was announced on the same day as the grim 2014 results were released. Amazingly, the share price picked up a little after the news.

Although we are left with blank canvases in the cases of Lonmin and Afrox, Reunert did make an effort to provide some details about the departure of its chief financial officer, Manuela Krog. After just over three years in the job Krog wants to try to re-establish a better work-life balance.

This seems reasonable given that top executives are rewarded so generously these days they must believe they owe all their waking hours to the company.

Portfolio rebalancing

Talking about striking a better balance, Michael Mark, the outgoing CEO of Truworths, cashed in R56.3-million of his Truworths shares this week to rebalance his investment portfolio.

Does this mean he's selling a chunk of his Truworths shares to buy a load of Mr Price shares? Or is he going to buy a farm? Or several very fancy cars? We will never know.

Mark was CEO of Truworths for a remarkable 23 years and created much value for shareholders in that time. Given the reduced worklife span of top executives it seems inevitable that his successor, Jean-Christophe Garbino, will not last nearly as long.

The Halamandaris family also seems very intent on rebalancing portfolios: they've been selling off chunks - or maybe just small bites - of their Famous Brands shares for a few months now.

Some big money in the rebalancing stakes was also secured this week by the guys at Capco, UK-based Capital & Counties.

Does anybody still believe that remunerating executives with heaps of share-based rewards helps to align the interests of executives with those of shareholders?

The decision by three of Capco's top executives to sell off their shares as soon as they were entitled to exercise the underlying options might help to dispel that quaint self-serving notion.

Ian Hawksworth immediately sold his 1.2million Capco shares for £3.96 a piece - that's an easy R21.6-million. Soumens Das sold 612525 and Gary Yardley sold 1.1million at the same price.

Dawn

By most accounts Distribution and Warehousing Network (Dawn) is a great operator when it comes to its core business of manufacturing and distributing building materials and fixtures.

What it seems less good at is share repurchasing. Weak economic conditions and the fall off in infrastructure investment have recently held back the company's performance and this may or may not have something to do with the desire to terminate its relationship with Imperial-aligned Ukhamba holdings. But at what price should they do that?

As Dawn shareholder Chris Logan notes, buying back Ukhamba's 78million Dawn shares at what is now a hefty premium to the share price will not get the necessary shareholder approval. Negotiations continue.