KenolKobil will split CEO and chairman’s roles to meet governance rules
Mr Jacob Segman, the KenolKobil chairman and CEO: The firm is planning to separate the two roles. FILE
Oil marketer KenolKobil is set to split the roles of chairman and CEO now held by Jacob Segman to boost its corporate governance credentials.
Mr Segman, who has been an executive at KenolKobil in the last two decades, was in April 2010 appointed chairman, making him the only chief executive to double as chairman among the companies listed at the Nairobi Securities Exchange.
The announcement of the changes comes amid the planned sale of a majority stake in the firm to Puma Energy by key shareholders in a share swap deal set to be completed in coming months.
The Capital Markets Authority said in November 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.
At present, the corporate governance guidelines allow firms to combine the twin 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 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 for independent directors of NSE-listed firms to be chairmen, they should have not worked in the firm as executives for the past five years and have no business relationships with the firm in the same period. Significant 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.
Paul Melly, the CEO and deputy chairman of Standard Group is also expected to come under the radar of the capital markets regulator.
In the US, the roles of chair and CEO 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 companies consider the merits of enhancing independent oversight by the board.
The question of independent directors is emerging 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 twin roles in KenolKobil— which is associated with former powerful Cabinet minister Nicholas Biwott — is emerging at a moment when the company could witness a board shake-up to accommodate Puma Energy.
(Read: KenolKobil top shareholders to sell stakes to Swiss oil giant) The entry of Puma Energy is expected to not only give Kenol Kobil a bigger financial and technical muscle to grow in the region, but will also offer logistical and strategic input.
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