April 23 (Bloomberg) -- SABMiller Plc, the world’s second-largest brewer by volume, plans a boardroom overhaul with Chief Executive Officer Graham Mackay succeeding the company’s veteran chairman before being replaced as CEO by the European head.
Mackay, 62, will hold the dual roles for a year, taking over from Chairman Meyer Kahn after July’s annual general meeting and handing over the CEO reins to Alan Clark at the following year’s meeting, SABMiller said in a statement today. Kahn, 72, is retiring after 46 years with the brewer.
The maker of Grolsch and Peroni has written to investors seeking approval of the plans given that the U.K. corporate code of governance recommends that CEOs shouldn’t also become chairman. Management has the “strong backing” of the two biggest shareholders, Altria Group Inc. and Bevco International LLC, the holding company for Colombia’s Santo Domingo family, according to the letter. They hold 27 percent and 14.1 percent respectively, according to data compiled by Bloomberg.
“It clearly runs against the U.K. corporate governance code for a CEO to go on to be chairman of the same company,” Trevor Stirling, an analyst at Sanford C. Bernstein in London, wrote today in a note. “We recognize Graham’s very powerful skill set and his ability to manage the evolution of what is undoubtedly a very strong and effective internal culture and a complex set of international partnerships, but we would have welcomed an injection of external perspective.”
SABMiller fell 32.5 pence, or 1.2 percent, to 2,580.5 pence as of 2:02 p.m. in London trading. The decline pared this year’s gain in the stock to 14 percent.
SABMiller told shareholders that any risk of an “over-concentration of power” by Mackay will be mitigated by the appointment of John Manser as deputy chairman, the one-year timeframe on Mackay’s tenure as executive chairman and Clark’s appointment as a third executive director.
“I expect minority shareholders will be very interested in how the company explains this,” Tom Powdrill, a spokesman for Pensions Investment Research Consultants Ltd., said today about Mackay’s move to the chairman role. “It’s unusual and something that investors usually take quite a principled stand on.” PIRC advises investors with about 1.5 trillion pounds in assets.
Mackay will become non-executive chairman at the company’s annual general meeting in 2013. Incoming CEO Clark has been SABMiller’s European head since 2003.
The succession plans “again prove there is a lot of stability in this top management team, that for me is the most important conclusion,” Gerard Rijk, an analyst at ING Groep NV in Amsterdam, said by phone. “It’s a continuation of a characteristic which SABMiller is famous” for.
Still, “there is a risk on flexibility, new thoughts in the organization, but at this stage of SABMiller, with the big deals done, I think this is risk that can be handled.”
Mackay has led SABMiller since 1999, overseeing a slew of acquisitions. Last year, the company bought Foster’s Group Ltd. in a deal worth about A$10.5 billion ($10.8 billion), helping it to take about half the Australian beer market.
Manser will become deputy chairman, as part of the changes, while Sue Clark, director of corporate affairs, will replace Alan Clark as European head.
Rob Pieterse, an independent non-executive director, will also be retiring from the board on July 26, after four years, SABMiller said in a separate statement.
The brewer said last week it maintained growth in beer volume during the fourth quarter as gains in Africa and Latin America offset a drop in Chinese consumption caused by wet weather. In Europe, lager volumes fell 1 percent due to “subdued” beer market growth and aggressive promotions.
Clark has kept profit margins high compared with rivals and helped the company gain a stake in Turkey’s Anadolu Efes Biracilik & Malt Sanayii AS, ING’s Rijk said.
Before taking over the European division, which includes Ukraine, Russia and more developed beer markets including the Czech Republic and U.K., Clark spent several years overseeing the company’s South Africa beer business.
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