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The shareholders have spoken

A small group of Grand Parade shareholders succeeds in getting two out of four proposed directors appointed to the board.

Former judge of the Cape High Court, Alex Abercrombie has been a non-executive director of Grand Parade Investments for 21-years and he has no intention of taking efforts to remove him as a director lying down.

At the GPI special general shareholder’s meeting, which was originally held on October 31, 2018 and was adjourned until December 5, he defended the board in a speech worthy of any closing argument.

He reminded the few shareholders present that their shares had effectively cost them 17c/share, and that they had benefited from dividends worth R184/share, which means the founding investors effectively “own shares you have paid nothing for”.

Yes, the share price has declined and some poor decisions have been made. “Look at Woolworths, MTN, Pick n Pay and Spur. All of these companies have declining share prices,” he said. “I do not deny that the decision to roll out Dunkin’ Donuts and Baskin-Robbins was not a good one as they came too soon after Burger King.

“But look at other corporate decisions; Woolworths’ decision to invest in Australia has cost it billions. I don’t see shareholders lining up there to remove the board.”

The general meeting was called at the request of a group of shareholders who collectively hold 12% of GPI shares. They have flagged a number of concerns related to the company’s performance, as well as the independence of the board and have proposed four non-executive directors to replace the incumbents on the board.

Read: Grand Parade’s truly extraordinary general meeting

However, Abercrombie argues that board members have dispensed with their duties with skill. “My contribution is my oversight of the gaming business, my legal input and my strategic oversight of the company. None of the proposed new directors have these skills.

“We have not failed in corporate governance. This is nothing more than a hostile takeover aimed at taking over the board, following which, the executive directors would be dispensed with.”

As it turned out Abercrombie survived the vote by a slim margin, with 52.8% of shareholders voting against his removal from the board. Walter Geach and lead independent director Norman Maharaj, survived by a similar margin. Not so lucky were Rasheed Hargey and Nombeko Mlambo, who were voted off the board.

Of the four directors proposed by the ‘dissenting shareholders’ two were appointed to the board as non-executive directors. They are Mark Bowman, former head of SAB Africa and Ronel van Dijk, former CFO of Spur Corporation.

A vote for the removal of:

For

Against

Alex Abercrombie

47.19%

52.81%

Walter Geach

48.32%

51.68%

Norman Maharaj

48.32%

51.68%

Rasheed Hargey

60.70%

39.30%

Nombeko Mlambo

60.74%

39.26%

A vote for the appointment of:

 

 

Ronel van Dijk

60.75%

39.25%

Mark Bowman

60.83%

39.17%

Cora Fernandez

47.17%

52.83%

Seapei Mafoyane

47.08%

52.92%

In what looks a bit like a shareholder compromise, the new board members will work alongside the executive leadership team which comprises Hassen Adams, executive chairman; Prabashinee Moodley, CEO; Colin Priem, CFO, and Mohsin Tajbhai, who was announced as an executive director effective November 28. While no reason was given for the appointment of Tajbhai, it may be as a substitute for Adams who is reportedly ill.

Speaking on behalf of the dissenting shareholders, Jarred Winer, a fund manager at Westbrooke Alternative Asset Management, noted that the outcome was positive. “You have two new high-quality people on the board. I think they can be effective. I think the voting also shows that the shareholder voice – both institutional and individual – can be larger than you think.”

The GPI AGM will be held next week where shareholders have the opportunity to quiz management and vote on a number of resolutions.

The offbeat comment from baseball legend Yoggi Berra “It ain’t over ‘till its over” seems apt at this point. 

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They got carried away from the initial success of Burger King ,whose lustre has alos dwindled significantly over the last year or two.Uncompetitive pricing and an average product has contributed to it.Where is the marketing as well?South Africans are not great donut fans,so why the hell invest in this concept.I do think that some tough times lie ahead,and certainly some fresh blood to take over from the likes of Abercrombie and Adams is needed.Egos aint going to help with a turnaround

I hate to break it to Mr Alex Abercrombie, but (good) corporate governance on its own doesn’t general sales nor operating profit. First, you need a good business strategy to make money and then comes corporate governance. Secondly, Woolies share price in 2001 was R2,95 and today it is R56 (with an all-time high of R102 in Nov 2015). Even at today’s price of R56 Woolies share is up 1900%. So please compare like with like.

Rumour about town is that some of the board members are also owners of supplier companies to many of these brands owned by GPI. Although, if one does not look for the “warm body” behind the complicated structures used these days to conceal ownership where conflict of interest may be involved, it is impossible to know. My question is whether the asset managers looked solely at the numbers and data of poor performing assets, or did they have a regulatory analyst look into the supply and distribution channels? this fact could have been key. but again, like I said. Rumours about town, that have not been substantiated, so we will never know. The assets owned by GPI in the restaurant and doghnut spheres are below average at best with no feet-through-door. it will have to hit rock bottom before shareholders do anything significant. Not a share that interests me in the least at the moment.

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