Asset management firm Allan Gray says there have been several deficiencies with regard to how the affairs of Letshego Holdings have been conducted over the long-term, which resulted in the performance of the entity declining from an operational, strategic and shareholder perspective.
Allan Gray, which previously took Letshego to task, is frank in expressing its position about gaps in listed companies. This week, the Managing Director of the firm, Phatsimo Ncube, told this publication that the outcomes for shareholders in particular over this period have been a concern, with the share price of Letshego dropping to near all-time lows before recovering somewhat in the past 12 months.
“It is our view that many of the issues could be resolved with fresh thinking at board level,” Ncube said. Letshego issued a notice for its AGM later this month last week. According to Resolution 7, one of the purposes is to consider removal of Enos Banda, Dr Gloria Somolekae, Hannington Karuhanga in accordance with Article 19.3 of the Constitution.
Letshego indicated in a statement that this resolution had been proposed for discussion and resolution at the AGM by Allan Gray on behalf of shareholders of the company who collectively hold 25,726,451 (1.2 percent) of the shares in the company in terms of Article 17 of the Constitution and Section 9 (1) of the Second Schedule of the Companies Act. Ncube said Allan Gray Botswana has engaged with the Letshego Board on several occasions over the past two years in order to encourage them to catalyse operational and strategic changes that they believe are required to assist Letshego in better delivering on company, shareholder and other stakeholder expectations.
Lauren Callie. Group Head of Strategic Communications at Letshego, confirmed that indeed there were such engagements with Allan Gray. She further added that Letshego continues to engage all its shareholders on a regular basis, updating valued stakeholders on the Group’s strategic progress, or to address any matters or queries raised.
“Allan Gray has engaged Letshego Group on a number of occasions over the last 24 months, and in line with Letshego’s committed shareholder engagement strategy, the Group and Board have not only provided detailed written responses to all queries raised, as well as providing any data or information requested, but also hosted one-on-one calls at regular intervals with management, as well as members of the Group Board. Letshego continues to make itself available for two-way engagement.” Callie said.
But Allan Gray is not satisfied by the outcome of these engagements. “These engagements have not led to the observable changes we would hope to have seen, nor has the Board firmly committed to these,” said the MD of Allan Gray. She pointed out that this motivated the decision to propose changes to the directors responsible for the areas which were most concerning. “We do not perceive there having been material positive change in the way the board of Letshego have conducted themselves in the time from the webinar to the present day,” Ncube said. “Our concerns in this regard still stand.”
According to Letshego’s statement, Allan Gray has nominated Maleho Mothibatsela, Oteng Sebonego, Boitumelo Molefe and Wilfred Mpai as replacements. “It is our expectation that making the changes we have suggested will result in a board composition that will be better suited to achieve outcomes that will be best for the company over the long term and its shareholders,” said Ncube.
In particular, she said Allan Gray believes that the company urgently needs to implement an executive remuneration policy that is better aligned with long-term company and shareholder objectives. “It is our view that an appropriate remuneration structure is one of the best ways that executives can be encouraged to align their views with those of the long-term health of the company and its shareholders,” she said.
In a previous engagement, on a similar matter, Callie said Letshego’s executive remuneration reviews confirmed that Letshego’s remuneration framework is in line with market trends and practice. She said Letshego’s split for the Group Chief Executive remuneration is 25 percent cash or base pay, 25 percent short term incentive and 50 percent long term incentive. “This information has been shared with Allan Gray during our engagements. We are aware that this split is aligned with Allan Gray’s recommended executive remuneration split,” Callie said. But Allan Gray has other concerns as well. “We also believe the company requires a much more robust investment process as regards to its expansion into new geographies/products and their ongoing evaluation/suitability,” said Ncube.
She further said the best practice is for a board to be constituted with an appropriate mix of expertise and experience to allow strategic guidance in a manner which allows the attainment of shareholder objectives. Meanwhile, a précis of Wilfred Mpai is that he is a former Chairman of National Development Bank and a former Director of Botswana Tourism Organisation where he also held the role of Chairman of the Finance and Audit Committee. He is current an Independent Trustee for Stanbic Pension Fund and Alexander Forbes Individual Retirement Fund and a Certified Business and Executive Coach. He is also a former Managing Director of Barclays Bank Botswana. Allan Gray believes Mpai brings relevant banking, financial and governance-related experience.
Maleho Mothibatsela is the Chairman of the Botswana Development Corporation and Investment Director at Blackthread Capital. He is expected to bring key understanding of long-term institutional shareholder expectations and will likely ensure that shareholder outcomes are not relegated as Allan Gray believes is currently the case. Oteng Sebonego is the Investment Director at Norsad Finance Limited. With experience in investment activities in various parts of the African continent, Allan Gray believes Sebonego is well placed to improve Letshego’s investment process.
Boitumelo Molefe, a former CEO of Debswana Pension Fund and Botswana Public Officers Pension Fund, has also worked in various capacities at Debswana and as CFO at Bokamoso Private Hospital. Having served on numerous boards, Allan Gray believes she brings a wealth of experience in finance, risk ad governance. Molefe is well placed to add value as a director of Letshego working with the Board and guiding management as necessary. She is currently the Financial Advisor to the CEO at Sidilega Private Hospital.