A Moneyweb analysis of the 100 largest JSE-listed companies reveals 14 companies where more than 25% of shareholders who voted at their annual general meetings (AGMs), were not in favour of the companies’ remuneration policies. Despite being phrased as a vote on a broad policy, this is generally a vote on incentives and remuneration of executives and management.
While there is no legal requirement to allow shareholders to vote on the matter, the King III Report on Corporate Governance, in Principle 2.27, states that “Every year, the company’s remuneration policy should be tabled to shareholders for a non-binding advisory vote at the annual general meeting. This vote enables shareholders to express their views on the remuneration policies adopted and on their implementation”.
Companies registered in and listed in the UK (or the European Economic Area or NYSE/Nasdaq) have had to, since 2013, offer shareholders a binding vote to approve the remuneration policy, with an advisory vote on the implementation of this. The distinctions between these and a “non-binding advisory vote on (or approval of) remuneration” must be borne in mind. Most locally-listed companies offer the non-binding vote as per King II.
Based on an analysis of their most recent AGMs (in other words, the year to February 15 2017), those Top 100 companies who received votes of less than 75% in favour on the resolution relating to remuneration are:
- TFG Limited – 52.72% in favour
- Anglo American – 58.49% in favour
- Telkom – 61.35% in favour
- Vukile Property Fund – 61.57% in favour
- Fortress Income Fund – 61.89% in favour
- MTN Group – 67.81% in favour
- Famous Brands – 68.48% in favour
- MMI Holdings – 68.71% in favour
- Woolworths Holdings – 69.92% in favour
- Shoprite Holdings – 70.29% in favour
- Resilient Property Income Fund – 71.04% in favour
- Reunert – 72.49% in favour
- Rand Merchant Investment Holdings – 74.57% in favour
- Impala Platinum – 74.84% in favour
Of the three with the most votes against, two have formally noted feedback from shareholders around remuneration.
In its 2016 integrated report, TFG Limited says: “We have taken note of comments received from shareholder advisers and our investors that arose from the shareholder approval of the remuneration report for the 2015 financial year.” The Public Investment Corporation (PIC), with an 11.6673% stake in TFG, confirms it voted against the resolution, in its quarterly disclosure. It states: “The remuneration policy has inadequate disclosure around the performance criteria for both the short-term incentives (STI) and long-term incentives (LTI). There is lack of disclosure of weightings, more than one performance indicator and targets. STI has only one performance condition – Heps, which can easily be manipulated and the LTI also has one performance condition – Heps, which is also inadequate. Best practice recommends that companies must have multiple performance measures to avoid manipulation of results or poor business decisions.”
Anglo American, says it “is mindful of the concerns expressed by a large number of shareholders in relation to executive remuneration in 2015, which have led to the remuneration report (Resolution 16) not receiving the same high level of support compared to previous years. The dialogue which the Company has had with many of its major shareholders leading up to the AGM has helped clarify the issues, and this will continue in the form of further consultation over the coming months ahead of the 2017 AGM, when a revised remuneration policy will be put to the vote. Setting executive remuneration in a volatile industry such as mining can be challenging and the Remuneration Committee intends to again engage with shareholders in order to refine the policy to ensure that it is both appropriate and motivational”.
It has been under pressure for some time, directly contradicting its claims of a “high level of support”. In 2015, it received even fewer votes in favour (54.36%), while in 2014 it managed around 60%.
The PIC, which owns 10.0399% of Anglo, says its reason for voting against the implementation resolution is: “The remuneration policy appears to be inconsistent with the best practice. The Company discloses earnings per share (EPS) as the only indicator for STI plan. PIC recommends that companies should have multiple indicators to avoid manipulation of results”.
In the case of Telkom, one wonders who else – apart from government (39%) and the Public Investment Corporation (11%) – voted in favour of the company’s remuneration.
|
Mkt cap (Rbn) |
Date |
For |
Against |
Abstain |
Shares voted |
||
|
1 |
AB Inbev |
2 394.24 |
27-Apr-16 |
79.3 |
20.6 |
0.1 |
75.7 |
|
2 |
BAT |
1 649.99 |
27-Apr-16 |
90.32 |
9.68 |
||
|
3 |
Naspers |
924.30 |
26-Aug-16 |
78.6 |
18.02 |
3.03 |
89.55 |
|
4 |
Glencore |
784.30 |
19-May-16 |
Not voted on |
|||
|
5 |
Richemont |
518.71 |
14-Sep-16 |
>96 |
|||
|
6 |
BHP Billiton |
483.26 |
17-Nov-16 |
97.4 |
2.6 |
99.6 |
|
|
7 |
Anglo American |
321.74 |
21-Apr-16 |
58.41 |
41.59 |
7.28 |
61.55 |
|
8 |
Steinhoff |
296.16 |
31-May-16 |
Not voted on |
|||
|
9 |
FirstRand |
292.98 |
29-Nov-16 |
97.14 |
2.86 |
80.5 |
|
|
10 |
Sasol |
250.57 |
25-Nov-16 |
90.93 |
9.07 |
81.1 |
|
|
11 |
Standard Bank |
238.68 |
26-May-16 |
84.48 |
15.52 |
0.11 |
82.84 |
|
12 |
Vodacom |
224.65 |
19-Jul-16 |
99.2 |
0.8 |
91 |
|
|
13 |
MTN Group |
218.10 |
25-May-16 |
67.81 |
32.18 |
78.51 |
|
|
14 |
Old Mutual |
173.34 |
28-Jun-16 |
93.17 |
6.83 |
72.86 |
|
|
15 |
Mondi |
145.79 |
12-May-16 |
94.32 |
5.68 |
76 |
|
|
16 |
Sanlam |
145.15 |
08-Jun-16 |
78.41 |
21.59 |
70.46 |
|
|
17 |
South 32 |
143.21 |
24-Nov-16 |
76.92 |
23.08 |
||
|
18 |
Aspen |
141.61 |
06-Dec-16 |
95.82 |
4.18 |
||
|
19 |
Barclays Africa Group |
139.24 |
17-May-16 |
81.68 |
18.32 |
91.7 |
|
|
20 |
Remgro |
121.53 |
01-Dec-16 |
Not voted on |
|||
|
21 |
Nedbank |
120.97 |
05-May-16 |
94.12 |
5.88 |
82.99 |
|
|
22 |
Shoprite |
100.63 |
31-Oct-16 |
70.29 |
29.71 |
84.29 |
|
|
23 |
Mediclinic |
100.18 |
20-Jul-16 |
85.02 |
14.98 |
84.46 |
|
|
24 |
RMB Holdings |
93.92 |
24-Nov-16 |
88.80 |
11.2 |
76.62 |
|
|
25 |
Investec |
92.67 |
04-Aug-16 |
80.27 |
19.73 |
76 |
|
|
26 |
Anglo American Platinum |
91.51 |
08-Apr-16 |
96.31 |
3.68 |
93.79 |
|
|
27 |
Capitec |
82.43 |
27-May-16 |
99.42 |
0.58 |
78.94 |
|
|
28 |
Tiger Brands |
81.15 |
16-Feb-16 |
89.21 |
10.79 |
100 |
|
|
29 |
Bid Corp |
79.48 |
11-Nov-16 |
98.90 |
1.1 |
100 |
|
|
96.10 |
3.9 |
100 |
|||||
|
71.60 |
28.4 |
100 |
|||||
|
30 |
Discovery |
77.33 |
29-Nov-16 |
86.06 |
13.94 |
78.28 |
|
|
31 |
Woolworths |
76.29 |
30-Nov-16 |
69.92 |
30.08 |
67.79 |
|
|
32 |
Growthpoint |
75.28 |
15-Nov-16 |
79.90 |
20.1 |
71.7 |
|
|
33 |
Hammerson |
73.31 |
25-Apr-16 |
Not voted on |
|||
|
34 |
Anglogold Ashanti |
71.53 |
04-May-16 |
87.17 |
12.83 |
78.71 |
|
|
35 |
Kumba Iron Ore |
67.43 |
13-May-16 |
92.18 |
7.82 |
91.82 |
|
|
36 |
Redefine |
62.97 |
09-Feb-17 |
76.68 |
23.32 |
78 |
|
|
37 |
Intu |
60.45 |
04-May-16 |
Not voted on |
|||
|
38 |
RMI |
59.75 |
24-Nov-16 |
74.57 |
25.43 |
76.46 |
|
|
39 |
Fortress |
58.65 |
01-Nov-16 |
61.89 |
38.11 |
64.26 |
|
|
40 |
PSG Group |
57.12 |
24-Jun-16 |
Not voted on |
|||
|
41 |
Bidvest |
55.54 |
28-Nov-16 |
99.10 |
0.9 |
100 |
|
|
95.26 |
4.74 |
100 |
|||||
|
67.99 |
32.01 |
100 |
|||||
|
42 |
Reinet |
55.12 |
30-Aug-16 |
Not voted on |
|||
|
43 |
Resilient |
49.42 |
31-Oct-16 |
71.04 |
28.96 |
78.5 |
|
|
44 |
New Europe Property |
48.92 |
12-May-16 |
Not voted on |
|||
|
45 |
Netcare |
47.26 |
03-Feb-17 |
90.06 |
9.94 |
72.75 |
|
|
46 |
Sappi |
46.06 |
08-Feb-17 |
94.71 |
5.29 |
82.89 |
|
|
47 |
Mr Price |
42.49 |
31-Aug-16 |
84.66 |
15.21 |
||
|
48 |
Capital & Counties |
40.66 |
06-May-16 |
97.94 |
2.06 |
76.61 |
|
|
49 |
Brait |
40.65 |
20-Jul-16 |
Not voted on |
|||
|
50 |
Pioneer Foods |
39.99 |
10-Feb-17 |
85.33 |
14.67 |
68.59 |
|
|
51 |
MMI Holdings |
39.87 |
22-Nov-16 |
68.71 |
31.29 |
81.4 |
|
|
52 |
Assore |
39.79 |
25-Nov-16 |
93.82 |
6.18 |
90.3 |
|
|
53 |
Impala Platinum |
38.86 |
26-Oct-16 |
74.84 |
25.16 |
72.43 |
|
|
54 |
Telkom |
37.62 |
26-Aug-16 |
61.35 |
38.63 |
81.28 |
|
|
55 |
Gold Fields |
37.58 |
18-May-16 |
85.07 |
14.92 |
1.3 |
100 |
|
56 |
Life Healthcare |
36.71 |
25-Jan-17 |
97.99 |
2.01 |
77.1 |
|
|
57 |
TFG Limited |
36.17 |
06-Sep-16 |
52.72 |
47.28 |
77 |
|
|
58 |
Truworths |
36.03 |
03-Nov-16 |
79.05 |
20.95 |
76.1 |
|
|
59 |
Imperial |
35.89 |
01-Nov-16 |
98.88 |
1.12 |
72 |
|
|
60 |
Spar |
33.89 |
07-Feb-17 |
94.49 |
5.51 |
72.85 |
|
|
61 |
Exxaro |
33.82 |
26-May-16 |
90.80 |
9.2 |
79 |
|
|
62 |
Pick n Pay |
33.70 |
25-Jul-16 |
84.58 |
15.42 |
88.78 |
|
|
63 |
AVI |
33.12 |
03-Nov-16 |
97.28 |
2.72 |
78.49 |
|
|
64 |
Liberty Holdings |
32.91 |
20-May-16 |
99.00 |
1 |
88.16 |
|
|
65 |
Distell |
32.46 |
20-Oct-16 |
97.56 |
2.44 |
90.19 |
|
|
66 |
Rockcastle |
32.25 |
25-Nov-16 |
Not voted on |
|||
|
67 |
Clicks Group |
30.43 |
26-Jan-17 |
98.26 |
1.74 |
83.64 |
|
|
68 |
Hyprop |
30.01 |
01-Dec-16 |
89.91 |
10.09 |
66.47 |
|
|
69 |
Tsogo Sun |
28.86 |
19-Oct-16 |
85.40 |
14.6 |
77.03 |
|
|
70 |
Massmart |
28.86 |
26-May-16 |
84.72 |
15.28 |
89.25 |
|
|
71 |
Santam |
27.75 |
01-Jun-16 |
87.10 |
12.9 |
100 |
|
|
72 |
Sibanye |
27.61 |
24-May-16 |
88.45 |
11.54 |
1.01 |
82.4 |
|
73 |
Northam |
26.03 |
02-Dec-16 |
90.03 |
9.97 |
4.38 |
76.83 |
|
74 |
Barloworld |
24.93 |
08-Feb-17 |
80.62 |
19.38 |
72.9 |
|
|
75 |
African Rainbow Minerals |
24.82 |
09-Nov-16 |
87.50 |
12.5 |
95.1 |
|
|
76 |
KAP |
23.69 |
30-Nov-16 |
92.38 |
7.62 |
88.11 |
|
|
77 |
Coronation |
23.26 |
14-Feb-17 |
84.59 |
15.41 |
79.6 |
|
|
78 |
EOH |
21.17 |
19-Feb-16 |
Not voted on |
|||
|
79 |
Dis-Chem |
21.10 |
No AGM since listing in late 2016 |
||||
|
80 |
Curro |
19.95 |
24-Jun-16 |
Not voted on |
|||
|
81 |
Tongaat |
17.97 |
27-Jul-16 |
86.58 |
13.42 |
90.81 |
|
|
82 |
Oakbay Resources |
16.40 |
30-Sep-16 |
100 |
0 |
100 |
|
|
83 |
Harmony |
15.98 |
25-Nov-16 |
91.03 |
8.97 |
87.06 |
|
|
84 |
Oceana |
15.72 |
16-Feb-17 |
90.1 |
9.9 |
94.1 |
|
|
85 |
Arcelor Mittal |
15.65 |
25-May-16 |
98.37 |
1.63 |
85.64 |
|
|
86 |
Famous Brands |
14.68 |
29-Jul-16 |
68.48 |
31.51 |
71.95 |
|
|
87 |
RCL Foods |
14.08 |
08-Nov-16 |
91.55 |
8.45 |
96.55 |
|
|
88 |
SA Corporate Real Estate |
13.90 |
20-May-16 |
90.98 |
9.02 |
79.11 |
|
|
89 |
Italtile |
13.90 |
25-Nov-16 |
95.26 |
4.74 |
83 |
|
|
90 |
JSE Limited |
13.90 |
26-May-16 |
99.51 |
0.49 |
67.42 |
|
|
91 |
Attacq |
13.82 |
24-Nov-16 |
89.51 |
10.49 |
64 |
|
|
92 |
Vukile |
13.41 |
29-Aug-16 |
61.57 |
38.43 |
69.81 |
|
|
93 |
Reunert |
13.38 |
13-Feb-17 |
72.49 |
27.51 |
87.13 |
|
|
94 |
Globe Trade Cente |
13.21 |
24-May-16 |
Not voted on |
|||
|
95 |
Super Group |
13.14 |
22-Nov-16 |
95.09 |
4.91 |
79.19 |
|
|
96 |
Zeder |
12.74 |
24-Jun-16 |
Not voted on |
|||
|
97 |
AECI |
12.67 |
30-May-16 |
79.83 |
20.17 |
81.58 |
|
|
98 |
HCI |
12.59 |
01-Nov-16 |
86.11 |
13.89 |
90 |
|
|
99 |
Blue Label Telecoms |
12.36 |
08-Dec-16 |
97.73 |
2.24 |
0.03 |
88 |
|
100 |
Nampak |
12.31 |
01-Feb-17 |
97.45 |
2.55 |
83.08 |
|
Of course, the more tightly-held/less-liquid the stock is, the more likely you are to find 99%-plus endorsements. In one – not surprising – instance, 100% of the 100% present shareholders voted in favour of the company’s remuneration policy.
It must also be noted that even if a relatively large percentage of shareholders vote in favour of a company’s remuneration policy (binding or otherwise), this percentage is almost always lower than votes on other resolutions. In other words, an 85% ‘approval’ of a remuneration policy will in all likelihood be far lower than the 90%-95% of votes cast in favour on other matters, such as re-election of directors or, even, the authority to repurchase shares.
In some cases, abstentions on the remuneration-specific resolution(s) are disclosed (and these are either included in the vote split or excluded).
The other vector here is how many shares were actually voted at the AGM. In some cases (like Anglo), this is surprisingly low (61.55%).
Two companies (unbundled during 2016) stand out in this analysis: Bidvest and Bid Corporation (Bidcorp). Both offer three (non-binding) votes on remuneration: an endorsement on the company’s policy on base package and benefits, its policy on short-term incentives, and its policy on long-term incentives
This means shareholders can vote far more granularly on these matters. Based on the past two AGMs, shareholders are far less satisfied (±65% approval) with the company’s long-term incentives than issues of base pay and short-term incentives.
* Hilton Tarrant works at immedia. He can still be contacted at hilton@moneyweb.co.za.
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COMMENTS 1
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It is high time SA follow the overseas ‘binding shareholders ‘approval vote with regard to company remuneration as prescribed in King 3.Local companies should adopt King 3.It sounds suspiciously convenient that SA companies rely upon King 2.
Shareholders are the lifeblood of any company and management must be accountable to shareholders also with regard to remuneration of the board.It would seen that King 2 is conveniently albeit questionably followed by corporate SA.
Vote 10
End of comments.