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Johannesburg - Despite widespread speculation that Ketso Gordhan, CEO of cement giant Pretoria Portland Cement (PPC) [JSE:PPC], resigned because of differences on his African expansion strategy, or the wage freeze he enacted for senior staff, City Press has learnt he left because the board of directors refused to let him fire a senior manager.
He handed in his resignation last Friday, but then apparently retracted it on Sunday after pleas from colleagues.
The board, however, refused to take him back and made the shock announcement on Monday afternoon that he was leaving after less than two years at the helm – right in the middle of PPC’s massive strategic move into the African continent.
PPC’s share price dropped by 8% and has not recovered since.
“Ketso regrettably resigned due to differences of opinion with the board, regarding board procedures for the approval of certain decisions,” read the company’s statement.
PPC chairperson Bheki Sibiya moved quickly, taking up the position of executive chair to fill the vacuum left by Gordhan.
He told City Press on Friday that Gordhan had “left of his own volition”.
Stewards of wealth
He would not comment on Gordhan’s effort to withdraw his resignation. “The board should not act on rumours. We are the stewards of the wealth of shareholders.
“We are saddened by his departure,” Sibiya said.
Sibiya maintained that Gordhan had agreed to a retainer in return for acting as a consultant to PPC. This also barred him from taking a new job in the cement industry.
The senior manager Gordhan tried to fire was apparently obstructing the company’s ability to carry out its growth plans.
More importantly, though, it would seem Gordhan gave up his battle because he felt the board would simply not support him.
Fight back
The popular CEO this week intimated he may fight back.
“I have received significant feedback from shareholders, as well as colleagues,” he told City Press.
“I feel encouraged to engage in some shareholder activism,” he said, suggesting he may try to rally other large shareholders to act against the board.
Gordhan is the largest individual shareholder in PPC, with about 1.4 million shares. These have shed roughly R3.5m in value since Monday – but they are still worth R42m.
If there is a battle brewing, Gordhan would have at least one ally: his predecessor as CEO, Paul Stuiver.
No surprise
Stuiver this week told City Press he was not surprised at Gordhan’s abrupt exit from the company.
The interference Gordhan spoke about when he resigned would be “quite normal”, said Stuiver.
Stuiver was interim CEO of PPC from 2009 until he recruited Gordhan to replace him at the beginning of last year.
“I faced similar problems,” he said.
The PPC board, which is largely unchanged since Stuiver’s appointment in 2009, is full of people who are “plainly incompetent, uninterested, unprepared and bring irrelevant issues to the board”, he said.
Looking for loopholes
Instead of doing their job, they “spent a lot of energy in finding loopholes to award themselves shares”, he said.
He struggled to do his job as CEO because the board would not support him, but would also try to veto decisions or dictate appointments.
Stuiver actually wrote his own letter of resignation after two and a half years, but never handed it in, he told City Press.
He said he had spent 18 years at PPC until 2001, when he moved to Barloworld’s logistics division as CEO.
He returned as PPC chief executive in 2009 and retired in 2013.
Asked about the possibility of shareholders coming together to act against the board, Stuiver, who has a significant PPC shareholding, said he would be “totally willing to join”.
Time to act
This would allow him to do what he “should have done”, he said.
“Shareholders need to be aware of what is happening.”
Stuiver and Gordhan have known each other since the 1990s.
“I think he is the man PPC needs. It’s very foolish of them to let him go,” said Stuiver.
Sibiya said the PPC board met with the largest shareholder, the Public Investment Corporation (PIC), on Friday morning and “had a good meeting”.
The PIC owns 11% of PPC, worth more than R2.2bn.
During Gordhan’s term at the company, the PIC bought more than 10 million additional shares (1.5%).
A progressive leader
Since taking the helm in 2013, Gordhan has made waves with his progressive approach to labour issues.
He famously took a salary cut of R1m, and encouraged another 60 senior employees at PPC to forgo increases, to fund a higher wage increase for the lowest-paid PPC employees last year.
He has also been an outspoken critic of high cement prices across the African continent and has vowed that PPC’s planned new cement plants in Rwanda, Ethiopia, Zimbabwe and Algeria would dramatically reduce the cost of the most basic construction.
- City Press
