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Johannesburg – Group Five shareholders [JSE:GRF] reached a compromise and selected a new board at an extraordinary general meeting at its headquarters in Midrand on Monday.
The construction and engineering company called the meeting following disagreements about the board structure with Allan Gray, which has a shareholding of close to 25%.
In June, Allan Gray nominated former chief executive officer Mike Upton to the board as a non-executive director, Bloomberg reported. The board opposed this as Upton led the group during a period when players in the sector were criticised and fined for collusion over contracts to build stadiums for the 2010 Soccer World Cup.
The board was also against Allan Gray’s proposal to have the company broken up. “A wholesale change in the non-executive directorship would not be in the best interests of the company,” Group Five said in a notice to shareholders.
“Furthermore, the board believes that his appointment would seriously undermine the authority and vision of the new management team as it seems contrary to the notion of a ‘fresh start’.”
READ: Group Five says investor wants breakup, return of ex-CEO Upton
Group Five said the new board would need to have the relevant expertise, industry experience, continuity and institutional memory as well as sensitivity to historical industry behaviour. The board should also have a “fundamental and strategic” commitment to transformation and execute the company’s strategy to deliver across the full infrastructure lifecycle.
During the annual general meeting, Leonard Krüger - who represented Allan Gray - denied the shareholder demanded that all five directors it proposed be selected for the board. Allan Gray proposed that Reitumetse Huntley, Nazeem Martin, Nonyameko Mandindi, Dr John Job and Upton be appointed as directors.
Krüger said Allan Gray does not have an alternative agenda and wants the best for Group Five. But Justin Chinyanta, one of the five directors who resigned, said Allan Gray had put in writing that the five new directors should be appointed as a unit, Netwerk24 reported.
Chinyanta said that Allan Gray wants to have its cake and eat it too. He added that Allan Gray was not acting in the best interests of the company.
Philisiwe Mthethwa, Kalaa Mpinga, Willem Louw and Vincent Rague are among the non-executives who resigned from the board following disagreements with Allan Gray. Their term comes to an end as of Monday.
The outcome of the meeting saw the five directors proposed by Allan Gray being elected onto the board. The Public Investment Corporation’s proposal for Cora Fernandez, Dr Thabo Clifford Kgogo and Edward Williams, proposed by Mazi Capital, also made the cut.
Group Five shares were trading at R19.80 when the JSE opened and deteriorated by 3.5% to R19.10 by 14:30.
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