Phuthuma Nhleko, chair of the JSE Ltd, the company that operates Africa’s largest stock exchange, says the company will take on board the criticism levelled at it over the composition of its board.
Some shareholders say the board is top heavy with “team big business” at the expense of retail investors.
A shareholder told the company’s AGM on Tuesday that the makeup of the board and its employment patterns suggested it existed to protect the interest of big business.
“I listened intently to your [Nhleko’s] opening remarks and it is pretty clear to me that the creation of a retail-friendly product and attracting small and medium companies to the JSE are important to you.
“However, it is very clear to me that not only does the JSE tend to recruit external employees from large organisations, it also staffs its advisory committees with representatives of large organisations,” the shareholder charged.
“And all your directors, I dare to say, represent or have experience in large organisations.
“In fact, I would suggest that what we have here is a board of directors that represent ‘team big business’. How will this exchange create an environment to attract more retail investors when they are not represented on the board?”
Nhleko is a former CEO of MTN, while other notable members of the board include former Standard Bank group CEO Ben Kruger and erstwhile Sanlam CEO Ian Kirk. Others include Faith Khanyile, nonexecutive director at Discovery, and Mantsika Matooane, who sits on the board of Nedbank.
Nhleko said the profile of the board’s members did not mean they were tone deaf to matters concerning retail investors.
“I would agree that SA tends to be top heavy with large institutions and we continuously look at evolving the board and getting a different set of skills. I think it is also true to say that while some of the directors have been with large companies, it has not really been a perpetual characterisation of where they come from,” Nhleko said.
“The fact that they may sit on the board of a large organisation does not mean they can’t bring skills and views that will be useful to creating that retail base. Having said that, we note the point and as we try to evolve the board and make it more diverse, that is something we will take into consideration.”
JSE CEO Leila Fourie defended the expertise of the board and said the retail market was key to the bourse.
Growth node
“We are very focused on the retail market. It is a very important growth node for us. If you look deeper at the experience of some of our board members, you will see many of them come from businesses which have a very large retail footprint.
“We [for example] have Ben Kruger, who was the group CEO of Standard Bank, and Zarina Bassa, who is on the Investec board. Both of those banks are focused heavily on the retail market and both of those banks have very large retail trading brokerage businesses.”
One of the criticisms levelled at the JSE is that it has been largely an institutional market that lacks deep penetration by retail customers.
An issue that also took centre stage at the AGM was the JSE’s plans to stem the exodus of companies over the past two decades. It is today home to fewer than 300 companies, with most small companies having delisted in the past few years.
Opportune Investments founder Chris Logan accused the JSE’s management of downplaying the delistings “crisis”. He asked why the board was failing to win over policymakers on the necessary reforms that would allow the bourse to thrive.
Nhleko responded: “It is not from the lack of effort by this company and board in engaging the government. I can say on a first-hand basis that Leila and other executive staff do engage policymakers to try and arrive at something that is in the long-term interest of the country.”
After the AGM Logan said the million-dollar question was why the JSE’s “endless presentations” to the Treasury, the Financial Sector Conduct Authority and the SA Reserve Bank were falling on deaf ears. “This made no sense, particularly when you consider everywhere else in the world governments were trying to boost their stock exchanges.”
The JSE in April announced its biggest shake-up in a generation to rein in the flight of small-cap companies.
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