Barloworld’s first black female chair in its 118-year history survived for just one year.
Last week the industrial equipment and services group announced that Neo Dongwana, who was appointed chair in February 2020, would be retiring in May 2021.
Dongwana’s decision to retire was announced two weeks after the group’s annual general meeting (AGM), at which her proposed remuneration of R1.6 million failed to secure the necessary shareholder support. With backing of 74.3%, the special resolution vote on Dongwana’s fees for 2021 fell 0.7% short of the 75% needed.
This is the first time ever that remuneration for a non-executive director on the JSE has failed to secure the necessary backing from shareholders. Dongwana’s fees are secured until May as her appointment to the chair was effective until May.
At the AGM in February 2020, some 97% of shareholders voted in favour of the chair’s fees.
This year’s significant change is in line with evidence that South African shareholders are becoming more alert to the issue of non-executive directors’ fees.
At most AGMs the resolution dealing with non-executive directors’ fees has traditionally been approved by 90%-plus of the shareholders.
However, in a sharp break with this tradition, last year just days before Sasol’s AGM, the board was forced to offer a 20% cut to non-executive directors’ fees in order to secure the necessary support to get the resolution passed.
Sasol’s excessive non-exec pay irks activist shareholders (Nov 17, 2020)
Sasol’s non-execs in fees-for-votes trade-off? (Nov 19, 2020)
Sasol’s non-executive directors’ fees are among the highest on the JSE.
In 2019 its chair was paid almost R7 million, while non-executive directors received fees of around R2.3 million. In addition they receive extremely generous allowances. These steep fees were particularly galling given the prolonged poor performance at Sasol.
By contrast Barloworld’s non-executive directors’ fees are relatively modest.
However in recent years, a number of key resolutions including those relating to the re-election of non-executive directors have hinted at shareholder concerns.
Mike Martin of Active Shareholder, a not-for-profit company that helps socially responsible shareholders to exercise their company rights, says he was a little surprised by the vote on Dongwana’s fee, but believes it was an expression of frustration regarding the board in general rather than Dongwana specifically.
“There seems to have been quite a level of resistance at the latest AGM. I think shareholders are worried they are not seeing the kind of management they’d like to see at this company,” Martin told Moneyweb. He noted that an unusually large block of 19.9% of shareholders abstained from voting on several of the resolutions, including resolutions relating to the controversial introduction of additional directors’ fees for consideration of strategic projects.
In a Sens statement released last week Barloworld said that Dongwana did have an option to extend her tenure for a further three years but added: “She believes that this is the right decision in light of the shareholder vote against her remuneration.”
Dongwana, who was an audit partner at Deloitte for almost 10 years, joined the Barloworld board in May 2012. She was appointed as chair in 2020 to succeed Dumisa Ntsebeza who had been a director for 20 years and chair for 13 of those years.