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Peter Moyo is a great guy and he was shoddily treated by Old Mutual who employed him with an inherent conflict when it allowed him to retain directorship of his company, NMT Capital, while serving as its CEO. And then the company axed him when the obvious conflict was exercised by him.
But is his axing worth R250m? As a policyholder, not a shareholder, one has to say: absolutely not. Like most South Africans, I am a first-generation retirement saver. Most of us are from homes where retirement savings were a luxury too far as our working-class parents barely made ends meet on apartheid wages. So, I had no idea about how to save when I started working, and I thank my lucky stars for the day I met my financial advisor. She put me on a straight path and insisted that I always preserved retirement savings (rather than cashing out as so many South Africans are forced to when changing jobs) and I preserved them all into Old Mutual products.
From that vantage point, I have a view on Moyo’s ask of the insurer, and it has to be a firm no. Policyholders are the foundation stone of Old Mutual, and instead it is only the institutional shareholders whose voices have been heard – the last I read, a few agreed that Moyo should be given the R250m he is asking, as they need this mess to go away.
Go give away your own bonuses, I felt like saying when I read it. It’s a crazy thumb-suck and opening gambit by Moyo and his media-savvy legal team.
For one: Moyo and his teams have not done that great by policyholders like me in the years under his tenure; of course, they were not helped by markets hit punch-drunk by the years of state capture which saw the economy stumble and then tumble. Emerging market sentiment was down and then Old Mutual decided to take our money and set up offshore, returning when, like many South African companies, it did not judge well how difficult it is to make money in economies less protected and uncompetitive for big business than ours is.
The most recent Old Mutual Savings and Investment Monitor reveals how stretched all South African households are, with many swiping their credit cards hard to pay for basics like groceries, while most would not be able to fund a substantial emergency.
At the same time, household savings are taking pressure, especially in low-income households. These results tally with the position in which Old Mutual policyholders (or customers) find themselves.
Is he really a victim?
While Moyo is playing the injured David to the giant Goliath of Old Mutual, how much of a victim is he, really, if you view him through the prism of his own company’s monitor of household income?
Prior to his axing, Moyo’s salary was about R3m a month before bonuses, which put him into the very top bracket of household income in South Africa – possibly in the top 0,0001%, give or take a few zeros.
He is one of 16 600 dollar millionaires in South Africa and is likely set for life, if you also account for the double income he received from NMT Capital. Moyo is playing the media, projecting himself more like a Lonmin miner facing the chop or like the American environmental labour rights activist Erin Brockovich taking on corporate power, but that’s not a truthful picture.
Call a conflict a conflict
C-suite executives earn fat cat salaries from their boards, with the implicit corporate governance contract practice that they serve at the pleasure of the board and can be fired by its displeasure. Old Mutual owes Moyo some settlement because it is complicit in allowing his employment on highly conflictual grounds.
One reason for how this occurred may be that the board does not call a conflict a conflict. Instead, it has something called a "related party transactions" committee to oversee conflicts, and the euphemism tells you why the company erred in not properly dealing with how Moyo was allowed to retain an active role in his own company while being CEO of Old Mutual.
It is the kind of flabby and shabby governance practice you see across corporate South Africa which has allowed the contemporary scandals at companies Tongaat Hulett and Steinhoff to occur.
Moyo needs a settlement to terminate his contract, as he is unlikely to get another big executive role in South Africa, which is likely why he is engaging the high corporate drama that has kept us spellbound – but R250m? As a policyholder, I would say ‘no way’ as it will ultimately come out of our hard-won savings and set a worrisome precedent for future practice.
*The writer has tried on numerous times to get Moyo’s perspective on this view, but neither he nor his lawyer has responded to requests.
