Dangote’s Win and Lafarge’s Board Big Mistake on CEO Contract

Dangote’s Win and Lafarge’s Board Big Mistake on CEO Contract

When I ran the piece that Michael Puchercos, GMD/CEO of Lafarge Africa Plc, was leaving Lafarge to take the CEO role in Dangote Cement,  I expected one specific comment here. Unfortunately, in our LinkedIn Nation and Tekedia, that did not come. I was largely disappointed that we have not sharpened the antenna for people to have noticed that Lafarge Africa failed on one of the most important governance systems in corporate boards: non-compete clause for Senior Executives within a specific period, upon exit. Yes, a CEO cannot leave Lafarge and join a competitor the next day!

If I had served in Lafarge Africa board, that would not have happened. Mr. Puchercos would have signed a document that would have made it impossible for him to resign from Lafarge and join Dangote Cement within at least three years. That Lafarge does not have that in the process is a total failure, and I do think shareholders deserve an explanation.

Michael Puchercos

Also, Mr. Puchercos, a beneficial of this obvious mess, has an explanation to offer. Possibly, under his watch, some executives could have departed Lafarge as he did not make sure the company has something to prevent them from joining a competitor immediately. You pay executives big money because their contracts are not typical like all of us. Part of the game is making sure they do not leave and join competitors with all the business secrets, proprietary information, etc which they have accumulated while working in a firm.

I serve on the boards of many companies. I have a playbook which becomes active when the CEO is not a Founder. A key requirement is that upon exit, the outside CEO cannot join a competitor within three years. That comes besides the typical non disclosures and confidentialities.

Lafarge Africa Board messed up big time. Of course, it could be possible that the board negotiated a monetary compensation with Puchercos/Dangote Cement which accelerated the lock-out period, from years to days. Yet, doing that does not make it better!

Michael Puchercos, CEO of Lafarge Cement, Joins Dangote Group

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5 thoughts on “Dangote’s Win and Lafarge’s Board Big Mistake on CEO Contract

  1. Most board members are now in name only, no third, fourth or fifth eye, only to keep nodding when the CEO makes presentations. If you easily get wowed when presentations are going on, you have no business sitting in board meetings.

    Not many people earn their pay cheque anyway, so the steamrolling continues…

    Reply
  2. Thanks for the observation, Lafarge is not alone in this practice but unfortunately they have become its poster child. One of the reason for the poor practice revolves around poor compensation or the unwillingness to pick the tab for the departing execs garden leave. Secondly perhaps the most profound is that we dont value trade secrets, business strategies or intellectual property, prevalent attitude is often nonchallant

    Reply
  3. Much thanks Prof for showcasing this anomaly.
    I bet most organisations are guilty of this, especially when expats are involved in roles.
    The Board and HRM must wake up and do their job diligently.

    Reply

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