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It’s clear Christo Wiese must go

His position as a chairman who is not independent is no longer tenable.

Christo Wiese’s position as chair of Shoprite Holdings is completely untenable.

At Monday’s annual general meeting (AGM), only 38.8% of ordinary shareholders voted in favour of his re-election as a director. Because of the high-voting deferred shares under the control of Wiese’s Thibault Square Financial Services, the resolution passed.

It is extraordinary that a full 61% of shareholders who voted would oppose the appointment of a chairman.

Wiese has been chair for nearly three decades (since 1991), a position that is not independent due to his direct shareholding in the company. The JSE Listings Requirements require the appointment of a lead independent non-executive director in instances such as these.

The announcement that highly regarded Professor Shirley Zinn would resign as lead independent director on Thursday was a shock.

Lead directors don’t simply resign with immediate effect.

Their exit is carefully managed (as was the case when predecessor Edward Kieswetter was forced to resign after his appointment as Sars commissioner).

Not only was Zinn’s resignation highly unusual and completely unexpected, but she was only appointed to the board in August 2018 and took the position of lead independent director in May. She had been in the role for just six months.

Zinn was leading the process to reform the retailer’s remuneration policy, which has been under tremendous scrutiny and has faced open dissent in recent years.

She told Bloomberg following the AGM that “succession planning in the context of the chairman” was discussed and that this “process” was underway. Wiese continuing as chairman is clearly a contentious issue.

Zinn told Business Day that she resigned for “personal reasons”. That’s nothing more than a non-answer answer.

Perhaps as lead independent non-executive director she felt her position was completely untenable? This is the only conceivable reason for her sudden exit.

‘No antagonism’

Wiese, as ever, is feigning ignorance. He told Business Day that “as far as he was aware there was no antagonism within the board”.

“We had a very good board meeting after the AGM and discussed various issues and then on Tuesday we received a note [from Zinn] informing us of her resignation.”

Oh, to have been a fly on the wall in that meeting. 

(Regarding the results of the vote for his reappointment on Monday, Wiese again feigned ignorance. He told Netwerk 24 that he “doesn’t believe that the vote results demonstrated distrust in him” … instead, he believes it was “part of a growing trend among institutional shareholders who increasingly demand independent chairpersons”.)

Shoprite also disclosed on Monday that the board is processing the nomination of Iaan van Heerden, a “financial advisor to Wiese’s family office”.

This comes after the failure of one shareholder, Shane Watkins of All Weather Capital, to get former Pepkor CEO Jan le Roux nominated to the board. Wiese criticised this ahead of the AGM and said it did not follow “usual procedure” (going via the board’s nominations committee). Wiese is chair of this committee.

Replacing Zinn with a credible director capable and willing to stand up to Wiese (if the best interests of Shoprite are put at risk) is going to be a big test.

Shareholders are still breathing many sighs of relief that Wiese’s bizarre attempt to merge the then Steinhoff Africa Retail (Star), now Pepkor, into Shoprite is a distant memory. The near collapse of Steinhoff in December 2017 put paid to Plan B – to acquire control of Shoprite via Star – too.

Nothing can take away from the remarkable achievements of Wiese, who could see the potential of retail and built Shoprite into the juggernaut it is today.

Indeed, he has done this a few times over with various businesses. His decision to buy OK Bazaars for R1 was derided at the time. Look how that turned out.

But why all this apparent resistance by Wiese to step down as chairman?

There is no question that he can continue to add immeasurable value as a director and as a significant shareholder. But it is precisely because of his misjudgements at Steinhoff and Brait that shareholders can no longer trust him to put the interests of Shoprite ahead of his own personal ones.

Following the (forced?) sale of shares last year, he is no longer Shoprite’s largest shareholder.

The Government Employees Pension Fund holds 11.85% versus Wiese’s 10.7%.

A controversial and abandoned proposal – initiated by Shoprite! – to buy Wiese’s deferred shares to simplify the company’s share structure in early 2019 suddenly looks cheap at the price (which equated to R3.3-R3.4 billion, depending on what dates are used).

The voting hurdle on this mooted transaction was an artificially high 85%, which meant that any meaningful dissent would see it fail. Wiese told Moneyweb editor Ryk van Niekerk on Tuesday that it was done this way as he did not want the 200 million additional Shoprite shares if there was significant shareholder pushback.

It is more than likely that a level of uncertainty is weighing on the stock because of these boardroom machinations.

The reputational hit Wiese has taken following the events at Steinhoff and Brait has certainly not helped. While many of Shoprite’s African operations are struggling, this doesn’t fully explain the 22% decline in its share price so far this year (at the low in August, the decline was 39.5%).

At the time of the deferred share plan, Coronation (with around a 5% holding) told Business Maverick that “the proposal was an extremely high price to pay to extinguish what is, in reality, a comparatively low level of risk”.

Was it really?

Shoprite clearly sees a future where it is not under Wiese’s control.

Given recent scheming, even R5 billion might be a bargain.

Then again, this drawn-out poker game may yet spring a surprise. Wiese’s ‘liquidity challenges’ could mean Shoprite acquiring these shares for much less than the original plan. And a once-off cash payment would be so much neater, wouldn’t it?

The Shoprite share has seen quite a decline this year

 

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He clearly should have known that, King 1,2,3,4,5 etc so why is he still there?

The attitude that goes with LLb’s???

The Ego

He’s clinging on now that his wealth has vapourised.

Not that he is poor. Just that he has a fragile ego and Shoprite is sentimental to him in the wake of what is the Steinhoff armageddon.

If you hear him speak on radio, he doesn’t have a flying f’k about anyone in the investment game hence why he sued Steinhoff to be paid out first.

His rollercoaster ride to riches and fame, and the losses he suffered taught me that you may be able to get away with creative accounting for a whole lifetime, as long as you don’t short-change some smart and influential German guy. You can inflate your balance sheet with creative accounting and give it to the bank as security and buy companies with your inflated paper until some securities regulator publishes a statement that bursts your bubble.

You can fool some of the people some of the time…….

Stupid arrogance.
Not much different from the ANC government and their stance on eTolls.

Distrusting shareholders are not what any company wants. It will take a lot for them to forgive what happened at Steinhoff under his watch. A little like taxpayers under Zumas watch….the distrust in the ANC by the minority ( and majority taxpayer) from Zumas tenure will take many years to heal….. inspite of our WCR win!

Ja – maybe he should go. Go to Mauritius and take his $742 million with him.
I mean da guavamunts will be ecstatic and BLF over the moon. Pity about all the job losses de facto.!!!

Do not confuse ownership and employment. Wiese does not employ the shoprite workers. He sells his shares, the company shrugs and carries on

how good the leadership in the past might have been: all good business decisions in the past, how good it might have been, does not cancel out massive current business mistakes. his leadership and business skills are not necessarily something of the past, but admittance of mistakes made would at least require stepping down(or is it a type of throne to sit on at all cost?)

That’s ridiculous – if you took a company that was worth R20m and built it into something worth say R1 billion and made some mistakes that brought it down to a value of R800 million, would you deem it a failure.

Stop hating on Christo guys – he has been a visionary leader in SA retail for many decades and built two of SA’s greatest companies. Sure he got duped by a friend and confidant – who has not had that happen to them. And by the way – there is no corporate governance rule in SA that absolutely forbids a company from having a non-independent chairman – as long as a lead independent non-executive is appointed, King IV and the JSE Listings Requirements are met. While this is clearly not ideal, many JSE companies have this dispensation. I’d rather have him there and make sure there is alignment between board and shareholder interests than having some independent sit there for the fees and lunches, while having 10% of the experience and knowledge of Wiese.

No, I disagree – he has always been in the vicinity when there is a whiff of impropriety – – – – no “visionary” leadership there – unless you believe his ability to get out of tricky situations (with the help of a lot of money and bluff and bully and bluster) is worth emulating.

This is the same guy that wanted to take a suitcase of money through an airport without first getting exchange control approval. Sometimes when you think you know it all there is always someone who knows a bit more and bursts your bubble

PPompies:

I agree mostly but it was stupid to buy out the consumer debt in a related party transaction. Not disclosed…

Bezos is worth multiples of Wiese with or without divorce. If a $100,000,000,000 guy does not have to resort to creative accounting and related party non disclosure since the last 25y then you have to ask serious questions of Shoprite and Wiese

He appears to be trying his hardest. Should give him a chance IMO

Democracy and capitalism are beautiful. I’d do the same thing if legally allowed, this is business not a moral contest.

Why does he bother anymore? He’s got enough, go fishing or play bingo or something.

Dr Wiese, despite still having huge wealth, still FEARS retirement in the true sense of the word (enjoying time at home & sitting on the stoep & reading an e-book 😉

This gentleman displays a hardy stubbornness to retire! *lol*

Why all these super-wealthy captains of industry (global phenominon) fear “retirement” so much? They prefer to be actively involved in business…..HATE the word “retire”.
They have all the capital in the world. No worries their living annuities will ever be depleted 😉

(There must be a big psychological reason behind it? The FEAR of loosing self-worth…?)

Or is retirement a cleverly devised concept for the broad middle class? (where fin.industry makes a living out of?)
The truly poor cannot retire & live off handouts, while the super-wealthy avoids retirement!

As the saying goes “once you retire, it’s an occupation that you won’t emerge alive from”.

Wiese is in a catch-22. Accept a low price and leave and the collateral damage is titanic. Stay on and the share price goes nowhere. In the meantime, it is hard to see the PIC supporting a bailout. And evidently other shareholders are growing bolder.

Gearing can be a bitch. But that’s how they roll down in the Winelands …

A few billion probly isnt enough to enjoy retirement yet…shame!

It seems it has already affected the share price (but not in the short term, although all could not be blamed on him). Investors have a choice here to vote with their feet and then Wiese may be even poorer for it.

If you read some of the books on the Steinhoff saga Wiese does not come off smelling like roses. Maybe this one will be another BOLT FROM THE BLUE. The sense I get is that Wiese does not do his own due diligence (and work) and seems to rely on the opinions of others that he trusts.

He was warned very early on (with facts and a detailed presentation) about Steinhoff and chose to disregard this and trust Jooste. Maybe he is just old school and seems to do business on trust and feel.

Wiese does not work on trust. There is zero possibility that Markus Jooste acted alone. In my opinion as well as the opinion of many others Wiese knew what was happening. If it had not been for that damn German investor he would have walked away whistling a happy tune. In SA too many blind eyes have been turned to the horrific business practices of corporate SA in general. The recent events which have been aired regarding Old Mutual, Steinhoff etc. are all too often ignored by authorities. But times may be changing….

How can you trust Wiese after his comment on Steinhoff before the bubble burst. His famous saying that all this news is lots of DRIVEL.Now when i see anything related to him i just see DRIVEL. BRAIT,TORRIE,STEINHOFF,PEPKOR all drivel and shoprite will be the same. White Basson bailed on shoprite and did not like MArkus Jooste and was right. Wiese has made money off other peoples hard work and now hes being exposed and making bad business decisions.

Steinhoff was his vehicle trying to take his money out of South Africa, he made a mess of it. Sad to say, he made a terrible mistake, so did Tekkietown and a few others.

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