Only two JSE Securities Exchange-listed companies, which take the top two positions in this year's table, have entirely black boards - similarly positioned empowerment investment houses Brimstone and Sekunjalo. This year's figures for empowerment at senior management level - which reflect the composition of companies' boards - have shown a remarkable improvement on last year.
But there is still a long way to go. According to Empowerdex, only 15 listed companies have predominantly black boards. A total of 143 companies do not have a single black board member, compared with 166 that do. There are a total of 438 black directorships on JSE-listed company boards, though many sit on multiple boards. There are 90 black executive directors.
The figures are worse for black women directors - there are only 88, of whom only eight are executives. Research by Who Owns Whom shows that black directors control only 4,55% of the total market cap of the JSE, on a one-director-one-vote basis. The top 10 companies listed in the table (page 75) all have black CEOs, and another three listed companies also have - the highest number of black CEOs yet.
The scores published in this survey are based on complex formulas derived from various black economic empowerment (BEE) policy documents, particularly the codes of good practice published by the department of trade & industry (DTI) in December, guiding the expected composition of company boards. A company will score full marks if it scores 40% for its black management representation. The last column in the table on page 75 indicates the weighted score - all 10 companies score more then 40%, therefore they all score full marks for management - the score reflected in the overall table "Top 185 Companies".
The formula used to calculate the weighted score is complex. Nonexecutive directors count for half as much as an executive director, up to a maximum of 10%; black women directors score double; black directors score for each member; the three most senior officers, including CEO, chief financial officer and chief operating officer, score double.
For example, a board of 10 people comprising one black executive woman (20%), two black executive men (20%), two black nonexecutive men (10%) and five white directors, would be considered to have five black directors. Such a company would be considered 50% black run and score full marks for its management component.
There is still a long way to go in transforming SA's boardrooms. Empowerdex estimates that 3 000 additional black directors will be needed before JSE-listed companies are in line with the DTI's codes of good practice.
"The difficulty is that there is a serious shortage of qualified directors. It takes a combination of experience and training," says Institute of Directors head Tony Dixon. The difficulties have been heightened by the additional pressures directors now face as a result of tougher corporate governance requirements. Historically, boards have consisted of people appointed by an "old boys' club", where specific board skills were not important. Dixon says people are appointed to boards without an induction process to show them what is expected of them. "A lot of them learn the hard way - they sit there for two years before understanding their role," says Dixon.
There is little doubt that black directors can make a difference to the transformation of a company, if they are active in driving the transformation agenda of the business. But, says Dixon, much of the normal functions of a board member will be learnt only through experience, unless formal board training is provided.
Second-placed Sekunjalo's all-black board is not by design, says CEO Iqbal Survè. The Sekunjalo board lost six members when a major investment, LeisureNet, collapsed in late 2000. Since then, the board has not had any white members. "I didn't realise that. We need to bring a bit of balance to this board," says Survè.
Sekunjalo was formed by a group of political activists in 1997, many of whom are still on the eight-member board under chairman Wallace Mgoqi, who is also city manager of Cape Town.
Brimstone and Sekunjalo have similar philosophies that may owe much to their both being from the Western Cape. Beyond just making money, they appear to be genuinely motivated by broad empowerment. The board of Brimstone, for example, is a mix of business people and civil society leaders. Sekenjalo's consists of active community and political leaders.
Both boards say their philosophy is about creating long-term businesses for the benefit of all stakeholders, including broader society.
"Though we're a BEE company, the emphasis is on development. We're not only about accumulation of wealth," says Survè.
Third-placed Johnnic Holdings is not likely to exist in its present form in next year's survey. The company is considering a strategy to collapse its pyramid holding structure - its main investment in Johnnic Communications will soon be unbundled. The 10-member board, under chairman Cyril Ramaphosa, scores well because three members are senior executive managers. The company has not had a CEO since 2001 when Paul Edwards moved to MTN for a brief stint at the helm. Instead, it had been run by Jacob Modise as chief operating officer, until his resignation last year. It is now managed by Christine Ramon as acting chief operating officer.
Fourth-placed Don Group has one of the longest-serving black CEOs of a listed company: Thabiso Tlelai. Tlelai gained control in 2001 when he took a majority shareholding in the group. Its board consists of only four directors, of which one is white. It is chaired by Danisa Baloyi.
The most powerful black CEOs are in the telecom sector. By market cap, MTN and Telkom are the leaders. In the heavily regulated telecom space, empowerment has arguably been more rapid than elsewhere. MTN CEO Phuthuma Nhleko and Telkom CEO Sizwe Nxasana have driven transformation at the cellular and land-line providers. Telkom scores better in other areas to give it the lead in the overall top 185 table, with MTN taking 26th spot.
The future of company boards depends on the development of black senior managers. But corporate governance codes emphasise the importance of nonexecutive directors, so many senior managers may find themselves on the boards of companies other than where they work as executives.
