LONDON—SABMiller PLC anointed its top European executive, Alan Clark, to take over as the brewing giant's chief executive in mid-2013, but indicated that current chief Graham Mackay will stay on as nonexecutive chairman.
The decision for Mackay to remain at the company contradicts typical European corporate-governance practices, according to which outgoing CEOs leave the company rather than ascend to the chairmanship.
The London-based beer giant—which makes Grolsch and Peroni and owns 58% of the U.S. joint venture MillerCoors—said current nonexecutive Chairman Meyer Kahn will retire in July after 46 years at the brewer. At that point, Mackay will occupy the temporary post of executive chairman for a year before handing the CEO job to Clark and succeeding the 72-year-old Kahn as nonexecutive chairman in July 2013. All three men are South African.
The company's plan for Mackay to hold both the CEO and chairman's roles for a year is also unusual in Europe.
Mackay, 62 years old, has been chief executive of SABMiller since 1999, transforming the company from a successful domestic South African beer maker into the No. 2 brewer in the world by sales—after Anheuser-Busch Inbev NV—through a series of acquisitions that brought the company a major presence on six continents.
Perhaps the most notable of those deals came in 2002, when South African Breweries—as the company was then known—bought Miller Brewing Co. from Philip Morris in the U.S. for $5.6 billion, creating SABMiller. Last year, the brewer bought Australian beer maker Foster's Group Ltd. for $10.15 billion.
In a letter Monday to shareholders, John Manser, SABMiller's senior independent director, defended the management decisions, which go against the U.K. Corporate Governance Code. He said the brewer needs a chairman that can "commit himself fully to the role" and "provide stability and continuity for a number of years." Manser, 72, is to become the board's deputy chairman.
Investors have little to complain about when it comes to the SAB's recent management. Its share price has more than quintupled since 2003, climbing to more than £25 ($40.31) a share in London from £4.31 nine years ago, in part thanks to its massive exposure to high-growth emerging markets.
"There's nothing broken at SAB, so having Graham as chairman will not inhibit necessary development," says Trevor Stirling, analyst at Sanford C. Bernstein & Co. "Having said that, I think all companies benefit from fresh perspective, so it's a lost opportunity."
Clark, 52, holds a master's degree in clinical psychology and a doctorate in literature and philosophy. He joined the company in 1990 in South Africa in a human-resources role and climbed the ranks, via posts in operations and marketing, before becoming managing director of Europe in 2003. He was considered a clear choice to become the brewer's next CEO.
One challenge Clark faces is the task of streamlining SABMiller's many operations to improve a global business that is decentralized and the product of many acquisitions.
It is a tricky job, because decentralization has in many ways been an asset for SABMiller, allowing the company to grow close to its consumers in markets far from London or Johannesburg. "The challenge is to have the best of both worlds," Sterling said. "It's driving that agenda harder, whilst making sure you don't throw the baby out with the bath water."
Clark must also defend SABMiller's coveted turf in Africa, where it dominates a lucrative and growing beer market.
In an interview with The Wall Street Journal in March, Mackay said SAB was maintaining its edge against competitors such as Heineken NV and Diageo PLC in Africa but admitted competition had increased as those rivals started to recognize the consumer opportunity there.
This article first appeared on WSJ.com
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