THURSDAY: 4 August 2022. Morning paper. Time Allowed: 3 hours.

Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.



In January 2021, the East African business community was shocked by unforeseen board developments at Zenith Bank Limited (ZBL). The Chairman at the time, Roy Keen had announced a pre-mature exit from ZBL eleven months before the end of his second tenure at the helm of the first-tier regional bank. For many years, ZBL was the most respected company in the whole of East Africa contributing more than 5% of the region’s gross domestic product (GDP). The announcement of the exit of Roy Keen on the mainstream media resulted to ZBL’s succession plan to be brought into the limelight. Due to the key position of ZBL in the regional financial markets, a never before seen public power struggle developed. Speculation in the media and the financial sector arose on whether the CEO at the time, Green Wood or one of the senior managers in the group would ascend to the top job. However, a chaotic succession debacle ensued which seemed to undermine the hitherto impeccable bank reputation for orderly succession management. The succession war risked damaging the reputation of ZBL’s Board as well as that of the company ZBL’s governance had for a long period been characterised by orderly board and senior management succession.

This as as a result of clear conscious and documented succession plans. These plans were regularly reviewed and they informed human resource and board development plans. The independent non-executive directors were charged with the responsibility of reviewing the plans and recommending the best ways on how to make them more effective. This entailed benchmarking internal candidates against external candidates to ensure the best candidate would get the job. Institutional shareholders also would give their input and ZBL would engage independent consultants in the search process. This has for a long time ensured that past succession of the board chairman was a low-key affair with minimal disruption to the business and public concern. Past succession has also been based on consensus and unanimous support by the board of directors.

The board succession which took place in the year 2012 when Tee Mapeu replaced Roy Keen as the CEO of ZBL and
Roy Keen was promoted to Chairman. ZBL got bad press for its tradition of promoting the CEO to chairman which was perceived to prevent the Chairman from independently and objectively monitoring the bank against the increasingly important concept of good corporate governance.

Traditionally the Chairman of ZBL functioned more as a CEO while the CEO served as a deputy. Following his
promotion to Chairman, Roy Keen agreed with governance professionals that operational management and oversight roles should be separate and distinct. In his term as Chairman, Roy Keen took steps to redefine the roles and transferred the responsibility for strategy development from the chairman to the CEO. The bank also engaged a full time Corporate Secretary and created a Corporate Services Department that was to focus more on corporate governance.

News that Roy Keen was stepping down from the position of Chairman within a year leaked to the media suggesting that ZBL board was ready for transition and had for two years been grooming a successor. It was alleged that the bank was stopping the tradition of promoting the CEO to chairman and naming Redd Okre, a non-executive director as Chairman. However, ZBL denied such as rumours. Roy Keen had been regarded and admired as one of the most influential corporate leaders in the financial industry and news of his departure caused the price of the shares of ZBL, which was listed at the Securities Exchange to dip. With no official communication from the bank, there was media speculation that insiders including management and staff wished the CEO to succeed the Chairman as was the tradition. Green Wood’s resume ticked all the right boxes with a solid track record and excellent employee relations. Sections of the regional media commented that there were certain emerging factors that would complicate the ZBL succession. Firstly, some investors felt that Green Wood was an effective executive but not good as a strategic leader. Secondly good corporate governance guidelines recommended that CEOs should not be elevated to Chairs. The Board seemed sold to the idea of breaking the tradition and appointing a non- executive chairman. This would leave Green Wood out of the race. This made the appointment of the chairman very unpredictable given the long speculative list of possible candidates generated and reported by the media. This was also complicated by the divided opinion of internal stakeholders, investors and the public.

In December 2021 one of the local business dailies reported that Green Wood had indicated that he would resign if not given the chairmanship position. This claim was refuted by ZBL but the public was skeptical and believed that there was a power struggle within the ZBL board. It was becoming apparent that ZBL had not communicated the succession plan and managed the expectations of both internal and external stakeholders. Hence the immense pressure on ZBL to get a solution as quickly as possible to reassure investors and restore the public image of the financial institution.

ZBL Board Nomination Committee found itself facing a dilemma. It noted that Green Wood had been an excellent CEO with cumulative experience in the banking industry in the region and his loss would be disastrous to ZBL. To complicate matters even more, with Roy Keen leaving the bank, this would be a double tragedy. If Green Wood succeeded Roy Keen, this would lead to investor discontent and undermine ZBL’s attempts to align itself to best practices in corporate governance. It appeared that no decision would satisfy the interests of both management and shareholders. The key issue was how to get a speedy decision that would stop public speculation on board succession and balance the interests of the company with those of the stakeholders.

In late December 2021, four days after the story on the dailies about ZBL’s boardroom power struggle, the bank called for a press conference where it unveiled a new leadership team. Taking into account a number of factors, the board appointed Keller Pen, a non-executive director as the Chairman. The Board also created a new position of Group Chief Executive Officer who would oversee the group’s activities in the region and appointed Green Wood to the position.

On the day the leadership changes were announced, the price of ZBL shares rose by 3 percent. The appointments seemed to appease investors as well as management by retaining Green Wood and appointing a non-executive director to the position of chairman. However institutional investors were not happy about the poor succession planning and its execution and some expressed views that the non-executive directors should be replaced to take blame for the unpreparedness in succession planning and management in the company.


1. Discuss five benefits that could accrue to ZBL from an effective succession planning policy. (10 marks)

2. Illustrate five elements of a comprehensive succession plan. (10 marks)

3. Summarise five problems that arose as a result of ZBL’s Chairman succession. (5 marks)

4. Assess the impact of poor succession planning on ZBL and its stakeholders. (5 marks)

5. Evaluate five disadvantages of ZBL practice of having the CEO being promoted to the position of the Chairman.
(10 marks)

(Total 40 marks)


1. With reference to corporate governance, distinguish between “law” and “ethics”. (6 marks)

2. Suggest four ways in which the resource dependency theory could aid decision makers in promoting good corporate governance. (4 marks)

4. Discuss five benefits that might accrue to an organisation as a result of having an advisory board in place. (5 marks)

(Total: 15 marks)


1. Describe five statutory duties of directors of a company. (5 marks)

2. Highlight five reasons why a company by special resolution may alter the objects in its memorandum of association. (5 marks)

3. Explain five grounds of altering a company’s capital clause in the Memorandum of Association. (5 marks)

(Total: 15 marks)


1. Identify five factors to consider before accepting a gift from a client. (5 marks)

2. Explain five obstacles an organisation is likely to face when carrying out a social audit. (5 marks)

3. Highlight five challenges facing corporate governance in developing countries. (5 marks)

(Total: 15 marks)


1. With reference to companies, discuss five objectives of developing a code of ethics. (5 marks)

2. With regard to capital markets, suggest five strategies that could be employed to minimise insider trading.
(5 marks)

3. Discuss five roles of the Board in ensuring compliance. (5 marks)

(Total: 15 marks)

(Visited 176 times, 1 visits today)
Share this:

Written by