CMC sets pace for exit of old style management
We have more than two million shareholders at the Nairobi Stock Exchange. This was a result of the privatisation program that saw the government sell stakes to the public in many companies.
This pipeline had momentum but subsequently stalled post the Safaricom IPO. The reason the pipeline stalled [and hindsight is a wonderful thing, I admit] was shares in Safaricom were sold too high and most of those two million shareholders are still off side.
The Government killed the Golden Goose by extracting a higher price for themselves but the net fffect was that the Safaricom IPO put a good portion of those two million investors out of the game.
Last Week, CMC Holdings saw its long standing chairman Mr. Kierieni and the CEO Martin Forster 'step aside'. New shareholders had muscled onto the share register and a sequence of three consecutive years of declining profits had focussed the minds of the new shareholders, who essentially ousted the chairman and CEO.
This is the first example [and there are 53 companies at the NSE] I have seen of management being held to account and I cheer it from the roof tops.
There are a number of companies that need to feel the shareholders hot breath on their collar and Paul Ndungu [The principal mover behind the CMC action] has done all two million shareholders a favour.
Capitalism has always worked on the basis that capitalism rewards success and culls failure. In some countries, CEOs are not given three years, they get given a year. If we want our Economy to perform optimally, we have to call failure to account. Paul just did that and I commend him wholeheartedly for setting this important precedent.
The broadcaster, Abeer Madi al-Halabi, said that President Ben-Ali's demise in Tunisia would serve as "a lesson for countries where presidents and kings have rusted on their thrones."
Paul Ndungu's CMC manouevre serves similar notice on management at those companies listed at the NSE who have 'rusted on their thrones.'