Louis von Zeuner agreeing to have his chairman’s fees at struggling sugar and property group Tongaat Hulett slashed by more than half, has been hailed by shareholder activists Chris Logan and Theo Botha.
The move was revealed during the group’s AGM at its head office at Amanzimnyama Hill in Tongaat, north of Durban, on Friday.
Tongaat Hulett’s previous board Chairman Bahle Sibisi, earned fees of more than R2.7 million for the group’s 2018/2019 financial year. Von Zeuner, who became the group’s chair in November last year, following the departure of Sibisi and several other Tongaat board members, agreed to his fees being “restructured” to R1.3 million.
Logan, a former Tongaat shareholder who has been a vocal critic of the group’s previous executive leadership and board even before it was rocked by an accounting scandal last year, told Moneyweb this week that Von Zeuner’s move is a “great gesture”.
He said considering the financial and other challenges facing Tongaat, the move is hugely welcomed. “It comes at a time when excessive fees are being paid to some executives and boards in companies that are not performing. Take Nampak for example: its chairman gets more than R2 million and company’s share price has fallen from R15 to R5 over the last couple of years.”
Logan described Von Zeuner as a “quality” appointment to take Tongaat forward, together with the new executive team that came in last year led by CEO Gavin Hudson.
“Von Zeuner has shown leadership in accepting a massive cut in his chairman’s fees….
“But this is a very important decision, because it highlights the new ‘tone at the top’. It is a good sign that things are changing at Tongaat,” he explained.
“With the group undergoing a major restructuring, which includes big job cuts, this move shows that the top is also feeling the pain and is cognisant that things need to change…. Tongaat Hulett’s previous board chairman earned ridiculous fees of almost R3 million a year. The previous board also needs to be accountable for where Tongaat finds itself currently,” added Logan.
Meanwhile, Botha said the move is “positive” in view of Tongaat’s previously high fee structure for its board and the group’s financial woes. “The boards of companies must be held accountable for a group’s non-performance or when things go wrong…. At Tongaat, the group’s previous audit committee needs to also account.”
At Nampak’s AGM last year, Botha was the one who raised the issue of board Chairperson Peter Surgey’s fees, in the context of the group’s reduced market size. This led to the company not raising Surgey’s fees last year.
Read: Who will fix Nampak?
“I expect Nampak’s board chair fees to come down, as well as the chairman’s fee at Comair to also come down substantially this year…. Another company, Purple Group, has already seen the fees for its chairman Mark Barnes come down from R2.2 million to around R0.5 million,” he said.
“If the shareholders of companies take a knock, then it is only right that the chairman and executives also take a knock in terms of remuneration. Directors fees must be aligned to shareholders interests,” added Botha.