Boardroom reshuffle at world’s second largest brewer breaches traditional corporate governance practices
Brewer SAB Miller has breached City convention by elevating its long-standing chief executive Graham Mackay to chairman.
Mackay will serve as executive chairman for a year, after which his replacement as chief executive – another long-serving South African executive Alan Clark – will take day-to-day control of the world’s second largest brewer.
Mackay is stepping up to chairman as Meyer Kahn, the 72-year-old South African who steered the business from a sprawling conglomerate under the isolated apartheid regime to a FTSE 100 company, is retiring after 46 years.
The boardroom reshuffle, announced on Monday, breaches traditional corporate governance practices, which do not permit a chief executive to become chairman unless there is a good explanation from the company. Neither are the corporate governance codes keen on the chairman being a full-time executive, as Mackay will be for a year.
Sarah Wilson, chief executive of corporate governance experts Manifest, said: “As an interim measure some shareholders might think it is OK but given the lack of the independence on the board they are going to have to face some tricky questions”. Mackay, one of the FTSE 100′s longest serving bosses, will move up to the chairman’s role at the annual meeting in July.
A spokesman for the brewer, which makes Peroni, Grolsch, Miller Lite and Castle Lager, confirmed that no external candidate has been considered for the roles of chairman or chief executive.
Senior independent director John Manser has written to shareholders ahead of the AGM insisting that the succession arrangements – some of them in breach of the UK corporate governance code – were appropriate for SABMiller. Of MacKay’s transition to chairman Manser said he was “the outstanding candidate for the position”.
Any investor protest at the succession plans is likely to be minimal as the appointments have already been approved by US firm Altria, formerly part of Philip Morris, and the Colombian brewing family Santo Domingo. These two investors account for five board directors and just over 40% of shares.
Meyer joined SABMiller in 1966, becoming managing director in 1983 and executive chairman in 1990. He and Mackay floated the business on the London Stock Exchange in 1999. A decade later about 8.5% of the group’s South African division was transferred to a broad base of stakeholders, including staff and liquor store operators, under a government-sponsored black empowerment initiative.
Under the apartheid regime, SABMiller, then South African Breweries, was a messy conglomerate and the country’s largest employer. Divisions under the SAB umbrella included a supermarket chain, a clothing store, hotel and gambling companies as well as manufacturing interests in shoes, razors, matches, furniture, textiles and plate glass.
Since its listing in London, Meyer and Mackay have taken the business through a series of major takeovers in the rapidly consolidating global beer market. Landmark deals included the purchase of America’s number two brewer Miller and Australian brewer Foster’s, the firm behind Victoria Bitter and Carlton Draught – but, confusingly, not Foster’s lager in the UK.