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Kenya Airways holds board meeting to pick Michael Joseph as chair

By Moses Michira | October 26th 2016 at 12:00:00 GMT +0300

Kenya Airways incoming chairman Michael Joseph (left) and Kenya Airline Pilots Association (KALPA) Secretary General Captain Paul Gichinga at a briefing last week. KQ will this morning hold a board meeting that is expected to formally appoint Michael Joseph as chairman. (PHOTO: BONIFACE OKENDO/ STANDARD)

Kenya Airways will this morning hold a board meeting that is expected to formally appoint Michael Joseph as chairman.

Insiders have disclosed to The Standard that the changes in the airline’s leadership had been considered among the major shareholders including the International Finance Corporation from August, suggesting that the shelved pilots’ strike was not exactly behind the shake-up.

On top of the agenda is to consider and approve the release of the half-year operating results for the period ended September 30.

“The board will consider and give approval of the half-year results and election of directors,” a well-placed source said of today’s meeting. The Kenyan Government holds the biggest stake at 29.8 per cent, followed by the Dutch airline KLM at 26.3 per cent and IFC at 9.56 per cent.

Mr Joseph is the newest board member after his appointment at the end of September, but has already been fronted by the Government of Kenya as a possible executive chairman.

But the proposal may have split the board, going by the events of last Monday – a busy day that ended with the withdrawal of a pilots’ strike. Most directors were sidelined from the negotiations as State House intervened to broker a deal with the officials of the Kenya Airline Pilots Association (Kalpa).

Details of the pact were made verbally to the Kalpa officials, who would then convey the message to their members without any signed documentation before a resolution was reached to defer the strike notice pending the execution of the agreement.

succession plan

The commitment from the State, which did not have the input of the other directors, explained how changes in KQ’s top management would be executed. Should the proposal to have Joseph as an executive chairman be adopted, it would be a first for a listed company, as the roles of the board and management should be distinct. This means the airline might require a waiver on corporate governance guidelines from the Capital Markets Authority.

Chairpersons of public companies and other independent shareholders often represent the interests of specific shareholders, and their role is limited to oversight. Managers, including chief executives, are on the other hand employees of the board of directors.

In a pointer to how precarious the agreement is, the powerful pilots’ lobby was clear it had only deferred the strike notice to a later date should the State fail to implement its end of the bargain.

A succession plan that was drafted by senior officials at State House, with the approval of President Uhuru Kenyatta, was shared with Kalpa’s leadership before details of the pact were discussed with pilots at the lobby’s head office on Monday afternoon last week.

Chief of Staff Joseph Kinyua and Solicitor General Njee Muturi, two of the President’s closest advisers, led the negotiations with the pilots. Further, representatives of the airline’s other biggest shareholder – Air France-KLM – will be in town attending a board meeting this week to approve the leadership changes, including the resignation of Ambassador Dennis Awori as board chairman.

Mr Awori, who holds several directorships, including at Toyota, has already told various media outlets that he “sees” himself leaving the role of chairman, though it is unclear if he will remain in the board.

It is envisaged that the newly-appointed chief operations officer, Jan de Vegt, will take up the daily operations of the airline while a substantive chief executive is sought. Mr Vegt, a Dutch national who arrived at KQ in July, would take up a bigger role beyond daily operations to include management of the airline’s finances, according to the secret deal.

At the same time, the Government yesterday started the process of recruiting a consultant that will advice it on the restructuring and turnaround of Kenya Airways. In a statement, the Ministry of Transport said it urgently needed an independent technical advisor that would advice the Government on how to go around ensuring that KQ is back on its feet.

“...there is need and urgent of an independent technical advisor to advice the Government on all aspects of the restructuring transaction and turnaround strategy of an organisation,” said the Ministry in a notice inviting technical advisors to bid for the job.

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