In a no­tice to the in­vest­ment com­mu­ni­ty dat­ed No­vem­ber 19, Massy Hold­ings Ltd an­nounced that it was re­duc­ing the size of its board of di­rec­tors from 13 to nine with 70 per cent (six of the nine) be­ing in­de­pen­dent non-ex­ec­u­tive di­rec­tors. That means four Massy di­rec­tors—Pe­ter Jee­wan, Suresh Ma­haraj, Vaughn Mar­tin, and Bruce Melizan—who were due to re­tire on ro­ta­tion, would not be re­turn­ing to the board, if the group’s share­hold­ers ac­cept the board’s rec­om­men­da­tion at the com­pa­ny’s Jan­u­ary 15, 2025 an­nu­al meet­ing.

“This re­vised board com­po­si­tion struc­ture aligns with glob­al best prac­tices for large list­ed com­pa­nies and is de­signed to en­hance de­ci­sion-mak­ing, ac­count­abil­i­ty, and com­mu­ni­ca­tion. A small­er, more fo­cussed board, close­ly at­tuned to its stake­hold­ers and mar­kets, will be bet­ter po­si­tioned to con­tin­u­ous­ly re­view its ca­pa­bil­i­ties, con­sis­tent with the com­pa­ny’s strate­gic di­rec­tion. This ap­proach will en­able the com­pa­ny to ex­e­cute its in­ter­na­tion­al growth strat­e­gy more ef­fec­tive­ly and ef­fi­cient­ly,” Massy’s cor­po­rate sec­re­tary, Wendy Ker­ry, stat­ed in a cir­cu­lar let­ter to Massy’s share­hold­ers, dat­ed No­vem­ber 19.

The de­ci­sion to re­duce the size of the Massy board came out of a gov­er­nance re­view that was com­mis­sioned in March 2024 “to fa­cil­i­tate the con­tin­u­ous im­prove­ment and in­creased ro­bust­ness of Massy’s ex­ist­ing gov­er­nance frame­work.”

Apart from what was re­ferred to as “board op­ti­mi­sa­tion,” an­oth­er key rec­om­men­da­tion of the gov­er­nance re­view was that the role of the port­fo­lio chairs be sep­a­rat­ed from the port­fo­lio CEOs.

In a sep­a­rate no­tice to share­hold­ers, al­so dat­ed No­vem­ber 19, Ker­ry ad­vised that the roles and ti­tles of the three port­fo­lio heads would be changed from chair to CEO:

* Marc Ros­tant’s role as group ex­ec­u­tive vice pres­i­dent and chair­man of the mo­tors and ma­chines port­fo­lio (MMP) will change to group ex­ec­u­tive vice pres­i­dent and port­fo­lio CEO of MMP;

* Vaughn Mar­tin’s roles as group ex­ec­u­tive vice pres­i­dent and chair­man of the gas prod­ucts port­fo­lio (GPP) will change to group ex­ec­u­tive vice pres­i­dent and port­fo­lio CEO of GPP; and

* Am­bikah Mon­groo’s role as group ex­ec­u­tive vice pres­i­dent and chair of the in­te­grat­ed re­tail port­fo­lio (IRP) will change to group ex­ec­u­tive vice pres­i­dent and port­fo­lio CEO of IRP.

The three changes be­came ef­fec­tive on No­vem­ber 19, the date of the no­tice.

In ef­fect, Massy CEO, David Af­fon­so, ex­plained in re­cent in­ter­views, the three port­fo­lio heads would now re­port to him and Massy’s chief fi­nan­cial of­fi­cer (CFO) James McLetchie, and their team at head of­fice, in­stead of to a board chaired by the port­fo­lio heads.

Re­ver­sal of changes

This is a re­ver­sal of changes rec­om­mend­ed by the ex­ec­u­tive of Massy in 2019, un­der for­mer group CEO and pres­i­dent, Ger­vase Warn­er.

In its 2019 fi­nan­cial year, Massy un­veiled a strat­e­gy to move from a tra­di­tion­al con­glom­er­ate to an in­vest­ment hold­ing/man­age­ment com­pa­ny with three main in­dus­try port­fo­lios—in­te­grat­ed re­tail, gas prod­ucts and mo­tors and ma­chines.

That struc­ture in­volved the cre­ation of boards for each of the three port­fo­lios that were chaired by an ex­ec­u­tive di­rec­tor from Massy and in­clud­ed non-ex­ec­u­tive di­rec­tors to “en­hance gov­er­nance with greater au­ton­o­my,” ac­cord­ing to Warn­er’s let­ter in the group’s 2020 an­nu­al re­port.

In his let­ter in the 2020 an­nu­al re­port, for­mer Massy chair­man, Robert Bermudez, said the en­hanced fo­cus placed on strength­en­ing the gov­er­nance of the boards of the group’s main port­fo­lio com­pa­nies had served the group well dur­ing the COVID-19 pan­dem­ic.

Point­ing out that it was for­tu­itous that the group had im­ple­ment­ed the gov­er­nance en­hance­ments, Bermudez stat­ed: “The busi­ness­es were well po­si­tioned to act with pace, agili­ty and au­ton­o­my. Massy was able to emerge and move as a stronger, faster and more stream­lined group of busi­ness­es.”

That mod­el “strength­ened or­gan­i­sa­tion struc­ture that de­volved greater au­ton­o­my to the man­age­ment teams of the port­fo­lios,” said Warn­er, who spent about 20 years at Massy, in­clud­ing 14 as group CEO and pres­i­dent.

Massy an­nounced the ear­ly re­tire­ment of Warn­er as the group’s pres­i­dent, CEO and di­rec­tor of the com­pa­ny on Feb­ru­ary 8, stat­ing that Warn­er “will re­tire on his 59th birth­day on April 6, 2024.”

Three-port­fo­lio mod­el

Warn­er, who had served as group CEO for 14 years, was hired by what was then called Neal & Massy from the man­age­ment con­sult­ing firm, McK­in­sey & Com­pa­ny, where he spent 11 years serv­ing clients in the US, Latin Amer­i­ca and the Caribbean, across a wide range of in­dus­tries.

In an in­ter­view con­duct­ed on Au­gust 15, the cur­rent Massy CEO, David Af­fon­so, said when the group made the change from the con­glom­er­ate mod­el to the three-port­fo­lio mod­el, an­nounced in 2019, it did not do the work to sort out the sup­port struc­tures for the port­fo­lios. That work in­volved get­ting clar­i­ty on what hap­pens at the cen­tre and the re­spon­si­bil­i­ties of the port­fo­lio.

“This is the work we have done re­cent­ly in the last cou­ple months to try and de­ter­mine what hap­pens where, who is re­spon­si­ble for what, sin­gle-point ac­count­abil­i­ty and clear ac­count­abil­i­ty for the busi­ness,” said Af­fon­so.

He added, “The cen­tre, James (McLetchie) and his team, would be re­spon­si­ble for ac­cess­ing cap­i­tal and the dis­ci­plined cap­i­tal de­ploy­ment to the port­fo­lios...

“The cen­tre would al­so be re­spon­si­ble for per­for­mance man­age­ment. In the port­fo­lio mod­el, we had set up a board for each of the port­fo­lios, but we are mov­ing now to where the man­age­ment of that would be done from the head of­fice. My­self, James and the team will meet with these port­fo­lios on a month­ly or quar­ter­ly ba­sis and re­view per­for­mance, not just fi­nan­cial, but all as­pects of per­for­mance across the board,” the Massy CEO said.

Asked why in 2024, Massy was look­ing to de­ter­mine the lev­el of au­ton­o­my that re­mains with the port­fo­lios, when those were es­tab­lished in 2019, Af­fon­so said, “It is an evo­lu­tion that we have been go­ing through. When we went to the port­fo­lio mod­el, there were clear del­e­ga­tions of au­thor­i­ty...What we looked to do is that hav­ing the ex­pe­ri­ence of four or five years, and see­ing some of the un­fore­seen con­se­quences and chal­lenges, we did a con­sul­tan­cy to un­der­stand what is the in­ter­na­tion­al best prac­tice, how do oth­ers do this, what are the op­tions avail­able and are there things we can do dif­fer­ent­ly to make our busi­ness even stronger.”

He said the con­sul­tant that worked on the stream­lin­ing of the board and the is­sues in­volv­ing the lev­el of au­thor­i­ty in the three port­fo­lios was McK­in­sey.

Clar­i­fy­ing the in­volve­ment of McK­in­sey in the cor­po­rate gov­er­nance re­view by email yes­ter­day, Af­fon­so said, “The board of the Massy group took the de­ci­sion in March to do a com­pre­hen­sive re­view of the group’s gov­er­nance struc­tures and sys­tems. This then had to be scoped and put out for ten­der via a re­quest for pro­pos­als (RFP). The McK­in­sey en­gage­ment was one part of this. It start­ed in May and end­ed in Au­gust.”

Massy’s cur­rent CFO, James McLetchie spent 13 years de­sign­ing and lead­ing the merg­er and ac­qui­si­tions in­te­gra­tion pro­grammes at McK­in­sey, ac­cord­ing to his short bi­og­ra­phy in the group’s 2023 an­nu­al re­port. He did not par­tic­i­pate in the se­lec­tion process of McK­in­sey be­cause he had a past af­fil­i­a­tion with the con­sul­tan­cy.

In the in­ter­view, Af­fon­so was asked whether the McK­in­sey con­sul­tan­cy was worth it.

“Cer­tain­ly. Some­times you know what you know, but you don’t know what you don’t know. What the con­sul­tan­cy af­ford­ed us is they have seen sev­er­al dif­fer­ent mod­els from sev­er­al dif­fer­ent com­pa­nies, in dif­fer­ent coun­tries. So in­stead of us try­ing to in­vent the wheel, the con­sul­tants can say this is how it is done here. These are the pros and cons.

“Based on what we know of you and what you are try­ing to achieve, how you are struc­tured and the re­sources you have avail­able, we think this is the best fit. But ul­ti­mate­ly, it is the man­age­ment and board that makes the de­ci­sion. The con­sul­tants rec­om­mend best-in-class op­tions, but we de­cide.”