A private dinner was hosted by Kela Securities on the 28 March 2023 at Bellagio Restaurant in Illovo with corporate SA guest speakers David Hertz, Chairman at Werksmans, Eric Levenstein who is director and head of Insolvency, Business Rescue and Restructuring and Duarte da Silva who has been on over 30 boards in his career, half of these were executive roles and the other half non- executive.
The guests who comprised of executives discussed the pros and cons of non executive directors, which are coming under increasing criticism.
Some of the guests included Anushka Bogdanov who is the Founder of Risk Insights.
Mark Lamberti, ex-CEO of Massmart, Imperial and ex-Chairman of Transaction Capital.
Keith Rosenbaum ex partner of Coopers, Manni Krog, previous CFO of Reunert.
Basically put South African non-executive directors are generally relatively well paid by global standards, however they don’t fully understand the company’s they represent, they don’t question or support executives sufficiently and don’t do enough preparations for board meetings ( many not even reading their board packs beforehand)
There are some non-executives who do thorough preparation , like Chris Seabrook and Russell Loubser.
Seebroek and Loubser are known to sometimes spend more than two weeks preparing for a board meetings.
There is some criticism that many companies are sued because of the larger fees they are covered for.
While insurance is critical as staff make mistakes a big mistakes could wipe out a company. So some insurance is necessary even if there is more self insurance.
Another problem is that non-executives sometime sit on too many boards. A max of four boards is considered to be prudent.
David Hertz, Chairman of Werksmans, suggests some non-executive directors may be too involved in the daily activities of the business, which can create conflicts of interest and undermine their independence.
It is important for non-executive directors to understand their role, which is to provide oversight and strategic guidance.
Another issue raised by Herts is the need for healthy scepticism and to hold directors accountable for their actions.
Herts suggests that if investors want to know which companies to invest in they should look at who sits on the board and what other boards they sit on, and follow people who follow their strengths.
He further talked about his impression of the Shoprite CEO Pieter Engelbrecht, his understanding of the business, an incredibly smart individual who is doing amazing things behind the scenes for the business.
The role of a director is not an easy one and due diligence is fundamental in ensuring the correct individuals sit on the boards.
By Marion Kate
