It was January 2017 and Old Mutual was halfway through its three-year managed separation process that would ultimately see the remains of the non-core assets sold off, the UK wealth management business unbundled and listed separately and Old Mutual Ltd listed on the JSE.

The exercise, dubbed as a grand homecoming, would also see the executive team of Bruce Hemphill and Ingrid Johnson, CEO and CFO respectively, step down.

Things were going well, helped by the fact that the executive team was richly incentivised to ensure that the separation process went smoothly.

Then the CEO of Old Mutual Emerging Markets, Ralph Mupita, upped stakes to move to MTN. This was a problem as he was a shoo-in for CEO of the listed entity, Old Mutual Ltd.

This left the board with a problem. It was deep into the unbundling process, it had a listing coming up in 18 months and no obvious replacement.

Peter Moyo was put forward as a candidate. As a former CEO of Alexander Forbes and partner at PWC, he had all the right credentials. Even better, he had been part of the Old Mutual team before. It was a slam dunk. Except that Moyo was massively conflicted. He is a founding director and shareholder of the NMT Capital Group, a private equity company that invests on behalf of Old Mutual Life Assurance (a company within Old Mutual limited that Moyo would ultimately head) and in which OMLA has a 20% stake.

The board decided that the benefits of employing Moyo outweighed the conflict of interest risks, which “could be managed”.

Thus Moyo rejoined Old Mutual in June 2017 as CEO of Old Mutual Emerging Markets and later Old Mutual Limited.

Since then, as far as the board is concerned, Moyo has performed adequately. In 2018 he received total compensation worth about R50.5-million (a pay rise of 32% according to the group’s latest remuneration report), which includes a generous R15-million bonus for ensuring the managed separation was completed smoothly.

The fact that Old Mutual Ltd is in the process of shaving R1-billion off its costs and has retrenched hundreds of people in SA, Kenya, Zimbabwe, Ghana and potentially Nigeria makes this payout seem obscene, but that is a story for a different day.

And then came the bombshell. A curt Sens statement issued before 8 am on Friday 24 May informed investors that there was a material breakdown in trust and confidence between Moyo and the board and he had been suspended. A separate statement to staff fuelled speculation, saying the suspension was due to a conflict of interest matter related to Moyo’s personal interests.

This was less than two years after his appointment and less than a year after the listing of Old Mutual Ltd.

Investors, fatigued by poor corporate performance and unwelcome surprises from JSE-listed companies, responded by dumping shares, causing the price to fall 5% almost instantly, recovering only slightly by the end of the day.

The board then issued another statement at 2 pm, which added very little. The statement said the suspension was “due to the management of conflicts of interest in business relations with related parties”. While there was no wrongdoing involved, the conflict could not be managed, the statement said.

At this point, there was no formal mention of NMT Capital, simply a reference to “related parties”. Moyo, meanwhile, had provided news agency Reuters with details of the breakdown, adding that he had “done nothing wrong”.

At the group’s AGM on the same day, chairman Trevor Manuel was at pains to stress that Moyo’s suspension had nothing to do with operational or performance issues.

“It is a difficult situation. What the board did in this circumstance (suspending Moyo) is probably the hardest thing we have done.”

The board now has an unholy mess to deal with.

Moyo, a man not known for backing down easily, has dug his heels in and is demanding a “complete” payout deal before he even considers accepting an exit offer, he told Bloomberg.

Compounding the board’s headache, an unprecedented number of shareholders voted against the company’s remuneration policy (46%) and remuneration implementation report (69.13%) at the AGM. The vote is non-binding, but JSE rules require that the company engages further with dissenting shareholders over these issues.

“We voted against these resolutions,” says Theo Botha of Proxy View, “but we did not expect that so many people would vote with us. I’ve not seen this before. I think people were upset about the scale of the bonuses.”

Proxy View voted against the resolutions because “we felt the remuneration committee had too much discretion on bonuses, where the key performance indicators were not clearly articulated.”

While there is no link between remuneration issues and the dismissal of Moyo, what is clear is that the Old Mutual board has suffered reputational damage, says Botha.

Old Mutual will be looking for a new CEO while fighting with the old CEO, at the same time as it is battling to find its mojo in its home market.

In an operational update for the three months to 31 March 2019, the company indicated that it was likely to miss its “results from operations” (RFO) target, a key performance indicator for Old Mutual. It added that it will become increasingly challenging to achieve this target over the three-year period due to negative RFO growth in 2018.

“If poor economic conditions persist during 2019 in our key markets, this will further challenge the achievement of this target. We remain on track to deliver on our other medium-term targets,” the group said. DM