KenolKobil strips its chief executive of chairmanship
Jacob Segman will remain CEO of KenolKobil and a director at the company as the oil marketer searches for a new chairman. FILE
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KenolKobil said on Tuesday said it will separate the roles and details of the decision will announced after its annual general meeting next week.
Mr Segman, who has been an executive at KenolKobil over the past two decades, was in April 2010 appointed chairman, making him the only chief executive to double as board chair among the companies listed at the NSE.
He will remain CEO and a director at the company as the marketer is expected to begin the search for a new chairman.
Jacob Segman will be stripped of chairmanship at KenolKobil as the oil marketer splits the roles of the head of its board and chief executive to meet regulatory demands.
KenolKobil said on Tuesday said it will separate the roles and details of the decision will announced after its annual general meeting next week.
Mr Segman, who has been an executive at KenolKobil over the past two decades, was in April 2010 appointed chairman, making him the only chief executive to double as board chair among the companies listed at the Nairobi Securities Exchange (NSE).
He will remain CEO and a director at the company as the marketer is expected to begin the search for a new chairman.
“We are splitting the two roles very soon and I will remain the chief executive,” said Mr Segman in a telephone interview with the Business Daily.
The Capital Markets Authority last year said that it will be asking KenolKobil to separate the roles of CEO and chairman, arguing that an independent chairman would be in a better position to oversee management and represent shareholders’ interests.
The corporate governance guidelines allow firms to combine the two roles in an interim arrangement and give reasons behind this in its annual report, a disclosure CMA argues was not done in KenolKobil’s case.
Kung’u Gatabaki, the chairman of CMA had said in an earlier interview with the Business Daily that the presence of an independent chairman “nurtures the creation of a thoughtful board and not one dominated by the views of senior management”.
The regulator’s guidelines state that an independent director should be appointed chairman of NSE-listed firm. This director is the one that has not worked in the firm as executives for the past five years prior to the board appointment and has not had business relationships with the company in the same period. Suppliers of the company or relatives of senior managers are also not recognised as independent directors.
“There should be a clear separation of the role and responsibilities of the chairman and chief executive, which will ensure a balance of power of authority and provide for checks and balances such that no one individual has unfettered powers of decision-making,” says the CMA guidelines.
In the US, the roles of chair and chief executive have often been combined, but now more companies are splitting the roles.
Investor pressure has prompted companies such as Sara Lee, Deere and News Corp to split the roles as more consider the merits of enhancing independent oversight by the board.
The question of independent directors is seen as a big issue in corporate Kenya which has relied heavily on old-boy networks for boardroom appointments.
The capital markets regulator was spurred into action by the recent boardroom wrangles at auto firm CMC Motors that saw its chairman, Peter Muthoka, replaced for doubling as chairman and key supplier of the troubled firm.
The separation of the two roles in KenolKobil— which is associated with former powerful Cabinet minister Nicholas Biwott — comes at a moment when the company has reported a loss of Sh6.2 billion. This is the highest ever among firms listed at the Nairobi bourse.
Its share at the NSE has shed 29.01 per cent in the past six months to the current price of Sh10.60, making it the worst performing stock on the bourse over the period.
The company’s loss of Sh6.2 billion reversed the net profit of Sh3.2 billion it posted in 2011 as high operating expenses, lower sales and foreign exchange losses took their toll.
KenolKobil says it will reduce the order of fuel stocks, go slow on hedging contracts and sell undisclosed non-core assets to help reduce borrowing and loan costs expenses.
