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Shareholder discontent at EOH

Sizeable votes against director appointments and remuneration …
EOH shareholders have made their unhappiness known by voting against five executive directors and voicing resistance to the company's remuneration policy. Picture: Shutterstock

Shareholders in EOH have made their unhappiness known, with sizeable votes against five executive directors and significant resistance to its remuneration policy at Thursday’s annual general meeting (AGM). The results were released after the market closed on Friday evening.

Nine directors had been appointed to the board since the last AGM, and the second resolution asked shareholders to vote on each of these. Of the eight directors voted on (Grathel Motau resigned as a non-executive in March), only one received an overwhelming number of votes in favour: independent non-executive Moretlo Molefi, with 99.4% ‘for’ her appointment.

New CEO Zunaid Mayet had 15.4% of shareholders vote against his appointment as executive director. This is highly unusual. Pumeza Bam, former group HR director at EOH and current group executive for people and transformation at Liberty Group, had 25.2% of shareholders vote against her appointment as a non-executive.

However, it’s the five other executive directors where shareholders clearly voiced their dissatisfaction. Rob Godlonton, CEO of EOH’s ICT and Technology division, had 32.2% of shareholders vote against his appointment, while Brian Gubbins (business development director), Ebrahim Laher (international division head), and Johan van Jaarsveld (business process outsourcing CEO) each had 33.1% of shareholders vote against theirs. Jehan Mackay, CEO of EOH’s Public Sector division, had a considerable 38.1% of shareholders vote against his appointment.

It is worth noting, of course, that work-in-progress as disclosed by the services group nearly doubled between end-January 2017 and end-January 2018 (from R999 million to R1.7 billion). Its situation with trade debtors is worse, with it carrying a balance of over R3 billion for more than a year. As at end January 2018, trade debtors totalled R3.8 billion. This increased by R390 million in the six months from year-end (July 2017). It did point out in its first-half results that “the group has received payments totalling over R500 million from outstanding public sector debtors” (Read: Two worrying signs in EOH’s numbers). It also noted in its presentation that Public Sector accounted for 17% of group revenue from continuing operations.

Such large votes against the appointment of practically every executive director is atypical.

Two appointments to the audit committee – Rob Sporen and chair and Lucky Khumalo as a member – also received sizeable votes against (38.6% and 21.2%, respectively). Last year, only 2.26% voted against Sporen’s appointment, with 17.72% against Khumalo’s.

But, it’s the non-binding votes on remuneration where shareholders really voiced their displeasure. These endorsements of the policy and its implementation barely passed! Only 55.1% of shareholders endorsed the implementation (with 44.9% against and 6.2% abstaining), while 55.8% endorsed the actual policy (with 44.2 against and 6.2% abstaining).

A 2017 analysis of the Top 100 companies on the JSE by Moneyweb revealed that only two companies – TFG Limited (52.72%) and Anglo American Plc (58.49%) – had fewer than 60% of votes in favour of their remuneration policies (Read: These 14 Top 100 companies are under scrutiny for exec pay). These were for 2016 AGMs. Even Shoprite, where remuneration has been under the spotlight for years, “only” had 29.89% of shareholders against its remuneration policy at the October 2017 AGM.

Given the low votes in favour, EOH has had to extend an invitation to “those shareholders who voted against the non-binding endorsement of … the Remuneration Policy and [its implementation … to engage with EOH in writing”. The company will likely host an investor call for these shareholders in due course.

EOH did not allow shareholders to vote on remuneration in either 2017 of 2016.

This discontent seems to be pretty widespread, as there are no significantly large shareholders of EOH stock. As at July 31 2017, its largest shareholders were the Government Employees Pension Fund (via the PIC) with 11.12%, Fidelity with 7.48%, Tactical Software Systems (Pty) Ltd (4.76%) and Bejaled Trust (4.36%). This trust is the vehicle in which former CEO and group founder Asher Bohbot holds his stake in the business. Since resigning as CEO, he has not sold a single share. TSS was acquired by the group in 2011.

Post year-end, PSG Asset Management increased its shareholding to 5.02%, and Foord Asset Management increased its stake to 5.44%.

Only 84.93% of shareholders (as of July 31 2017) were public (15.07% were directors/associates of the company, share trusts and treasury shares).

It is highly likely, then, that each of the sizeable shareholders in EOH voted against the resolutions that had large votes not in favour.

Read more:

EOH announces major restructuring

EOH headline earnings slump 23%

Hilton Tarrant can still be contacted at

He holds shares in EOH, first acquired in March 2011.



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Let me be the first to comment.

As a prior owner of an EOH acquired business during the golden years 2009 – 2015 the following:

EOH was a great company with a CEO, probably the humblest person I ever shook hands with.

The problems started with the acquisition of TSS (Danny and Jehan Mackay). This acquisition very obvious, to obtain a slice of the government contracts, which in my opinion largely the downfall of EOH.

Dealing with government and its cronies’, BEE tenders and all else not worth the time and effort for further discussion. Hardly are any tender outcomes made on merit but rather on who benefits most.

The result thereof clearly be seen from the share price. A high of R178 end July 2015, with a 75% loss to date compared to the 40% compounded growth YOY in earlier years.

Further my opinion for what it is worth on the appointment of executive directors. I say my opinion only as some of my interactions were limited to these directors and others more so directly or indirectly reporting to them.

Asher, a world of respect. In our limited conversations and discussing personal frustrations someone worth looking up to. Unfortunately for me, the source of the problem was within the management of the business units and very little Asher could do about it. Looking at how his personal wealth (ownership of EOH) was reduced over the last year or so, with him not selling a single share only speaks volume of being a worthy CEO.

Brian, Irish arrogance at its finest – enough said.

Rob, a hard worker with too much on his plate. I guess doing more does not necessarily result in better outcomes. Rob’s downfall, his favourites. Despite (I think) knowing what is good for the business, he persisted with more of the same. This referring to the running of the BU’s he was responsible for. Most probably the cause hereof past agreements with certain BU heads, that no matter the problem these agreements to be adhered to.

Jehan, clueless, arrogant and way to immature for the responsibilities he had. Out of touch with reality – an under estimation. Amazing what influence, cronies’ and connections can do for you.

Ebrahim, a genuine and caring person but fighting fires all-day. A result of wanting to grow the SAP BU to fast without the right calibre of a team making this possible.

Zunaid, limited interaction, friendly from a distance but probably would have been better to have had Johan as the new CEO.

Perhaps, the results of the votes enough to make way for a fresh approach. And yes, the old cadre to acknowledge their mistakes which has cost them dearly, not to mention quality people leaving for “greener pastures”.

I doubt that EOH can become its former self. It is really a shame what transpired the past few months and will take a magnitude of change within for a real change to take effect.

None of what transpired was a result of Asher leaving or Zunaid becoming the new CEO, coincidence more like it and unfortunate timing for Zunaid.

The era of Asher as CEO – the best years of EOH or is that the era before TSS being acquired?

Thanks for your post. Very illuminating!

With global software giants all getting into cloud computing, do you think the golden era of local software support is over? I can’t see how Oracle, salesforce, SAP etc. will need nearly as much help from companies like EOH to drive profit, when they can run their platforms from a central hub, and use remote support centres in low cost countries.

RowanG1, this is very true although nothing new. Cloud solutions is everywhere and there will always be the need for implementation and integration skills within existing business systems. The Oracle’s, SAP’s and Microsoft’s is most certainly eating into the margin of the likes of EOH and their competitors and has been doing for many years.

Back to my earlier comment of “more of the same” this is exactly what I referred to, the lack of innovation from EOH. Change is after all the only constant. To be fair to EOH, their growth strategy was through acquisition at all cost. When the market dries up in acquiring quality businesses this then presents a problem as to achieve similar past results for their shareholders. It is understandable that especially in South Africa and our small economy, it nearly impossible to sustain growth at 40% or even close to it. The problem with EOH being a public company is their shareholders expectation of similar or better results. In context, EOH still managed to do very well in comparison to other technology businesses or JSE listed companies.

Asher made it clear that they don’t invest in technology nor in start-up like businesses or thinking as this does not align to where they were at the time. Fast forward some years and this perhaps now affecting them in some way. It is innovation that fosters growth, innovation that is unfortunately missing and hence some of those acquired businesses and past owners looking for greener pastures.

To be very honest, as owners we were mostly given free reign as long as those all-important numbers were met. Come quarter end, half-year and year-end it was certainly not a nice place to be and especially when your warranty and bonus were affected.

I was never taken seriously by some in “having what it takes” to be acknowledged with the necessary respect, although time was always made to listen to my gripes. This in all probability being vocal and direct, calling a spade a spade, which sometimes can be construed as arrogant and not conforming to their group thinking. This despite my true caring intentions and having suggested many times ideas on how to improve and bring further efficiencies into business units. Referring to my first comment, based on previous agreements this not possible. Better to continue as is, then to upset the applecart.

EOH is going to have a tough couple of years ahead of them. Before I am called out as a racist (in the context of SA), they should consider the following:

1. My unworkable suggestion to them would be to disband all government related business units and contracts;
2. Drastically clean-up where needed, become lean and agile. Get rid of the dead wood, loafers and favourites;
3. Critically look at the people on the ground, find those with great ideas and let them be the new force helping EOH change for the better. Innovate, innovate and never stop innovating.

Collateral damage will be part of the course, for shareholders, employees and our illustrious government and liberals.

If EOH wants to “quickly” become their former self, action the points made above. 3, 2 and 1 in that order and you will be surprised what can happen.

I will await the 2021 financial results, and just maybe EOH the rising star again from the current turmoil they find themselves in.

Thanks for your well thought out reply. Top calibre. Best wishes.

I totally concur with your inside evaluation of EOH and I also had the pleasure of meeting with Asher some years ago whilst we were in a steep growth phase with our local ERP solution. However he was not interested in being an OEM owner of the Intellectual Property where I said that with proper investment is very lucrative – ie SAP, Oracle etc.
We both walked away much the better for insight into the business models of each others business’s. I was very much against the idea of putting much our business eggs into the Government basket due to the very nature of dealing with Govt. And it is not just South Africa – we had to send a team to the UK for a year to assist the local Councils that bought our development Tools and extracting payment out of them was arduous – to say the least.
Unfortunately EOH has grown faster than the Management team and I fear it may look the same as a Faritec, Brainware, UCS and so the list goes on.
We are a tiny little software development company that owns it own IP and we have been around for 30 years now – not mega millionaires but comfortable.

Cloud computing is competition for a business like EOH who use this format themselves but is still not a secure enough facility for storage. The winner will be the business that can offer a totally secure unhackable solution…I don’t think it’s been invented yet,!
Interesting story and comments from an Insider.
I’m sorry EOH has landed itself in trouble, but trouble is what happens when people stop paying attention and when Government contracts stop paying their bills.

End of comments.


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