Shareholders have slammed Barclays Africa Group (soon to be renamed Absa Group) on pay at Tuesday’s AGM, with 47.4% of those present voting against the company’s remuneration report. The group had put two non-binding resolutions to vote: one on the group’s policy and the other on its implementation. In the case of the former, 76% voted in favour.
A vote of just 52.6% in favour of the group’s implementation of its remuneration is damning, considering that Barclays plc holds 14.9% of votes and would’ve almost certainly have voted yes. It is worth noting that only 75.6% of shareholders were present for these votes.
Last year, the former parent held 50.1% and the result of the (single) non-binding vote on remuneration was 75.75% in favour (with 90% in attendance).
Old Mutual Investment Group, the third-largest shareholder in Barclays Africa (4.47% as at December 31 2017), voted against the non-binding resolution on the remuneration implementation report. In its published reasons for this, it says “a vote against this item is warranted [as] one-off awards of restricted shares have been made to executive directors. The performance conditions attached to these awards are based on a qualitative assessment of individual performance (and thus opaque to shareholders), and the performance period for these awards is less than three years.
“Separately, the targets which apply to the performance share awards made during FY2017 are not disclosed.”
In 2017, the bank made a total of R21 million in restricted share awards (RSAs) and R92.5 million in long-term incentive plan awards to five executive directors and prescribed officers. The RSAs have a performance period of two years from October 1 2017, while performance for the long-term incentive plan awards is measured over three years.
The bank’s second-largest shareholder, the Public Investment Corporation (PIC) with 6.56%, more than likely also voted against the resolution. And it is understood that Allan Gray also voted against the implementation resolution although, based on Barclays Africa disclosure, it holds less than 2.5% of the group on behalf of clients. Last year, Allan Gray voted against the resolution on remuneration as well as the resolution to place unissued shares under the control of directors.
Blackrock, the world’s largest asset manager, holds just over 3% of the group. In notes about proxy voting, it says: “every year, we vote globally at more than 15 000 shareholder meetings, on over 130 000 proposals. Our starting position is to support management. We generally prefer to engage in the first instance where we have concerns, and give management time to address or resolve the issue. We vote against management proposals if the company is unresponsive or seems not to be acting in the long-term interests of shareholders”.
While proxy voting records from Tuesday’s AGM are not yet published, it is worth noting that Blackrock voted against four resolutions at Barclays Africa Group’s 2017 AGM: the re-election of Alex Darko as director, the re-election of Yolanda Cuba as director, the election of Daisy Naidoo as director and the non-binding resolution (7) on remuneration.
In 2017, Vanguard funds which held Barclays Africa stock voted for all resolutions.
Given that more than 25% of shareholders voted against the resolution, the board has to extend an offer to the dissenters to engage, as required by the JSE.
The bank notes, in its remuneration report, that it “had a 75.7% vote ‘for’ our remuneration policy at our 2017 annual general meeting. We seek to improve this result and have made our comprehensive disclosure more transparent to enable active and extensive engagement with our shareholders.”
Issues raised by shareholders in 2017 included:
• The pay mix of executives is distorted and too high due to the combination of conventional salary and role-based pay.
• The current 10% new share issuance limit for ‘reward shares’ is higher than what is considered appropriate.
• The variable remuneration arrangements are not subject to performance periods longer than one year.
• The level of disclosure around performance measurement should be enhanced.
• No clear linkage to targets on incentives – there should be quantitative stretch targets that can be tracked.
• Success in separating from Barclays PLC should be a factor in the long-term incentive plan conditions.
The group provided fairly detailed feedback in response to these, which it claims includes additional disclosure in its remuneration report.
Earlier this month, Barclays Africa Group fired joint auditor KPMG by withdrawing the resolution on its reappointment from consideration at yesterday’s AGM.
Hilton Tarrant can still be contacted at firstname.lastname@example.org.