In a shocking display of shoddy corporate governance, the board of Zeder Investments took 27 minutes to demonstrate why fully-virtual AGMs should be prohibited as soon as the Covid-19 lockdown is safely lifted.
Not only did the company incorrectly inform a number of shareholders they could not participate, the technology provided for attending was so inadequate that several shareholders reported that they were unable to access the meeting until halfway through.
One lucky shareholder who did manage to attend all 27 minutes said there wasn’t enough time for shareholders attending the meeting to vote on resolutions.
But the most significant complaint related to how the board dealt with questions.
“Badly,” said CEO of Opportune Investments Chris Logan, who described the directors as “arrogant beyond belief”.
Shareholder Albie Cilliers told Moneyweb: “Questions submitted by shareholders were not read out.”
Cilliers, a shareholder of long-standing who is currently embroiled in a legal battle with the Zeder board, himself was only assured access after he threatened to injunct the meeting.
Executive committee member Johan Holtzhausen warned shareholders early on that the questions would be “moderated” and those deemed “not that appropriate” would not be aired. He proceeded to present a series of moderated and largely anodyne questions to CEO Norman Celliers, who responded with equally anodyne answers.
On whether or not there would be more share buybacks, Celliers said: “With regard to share buybacks one must acknowledge that the decision to buy back shares, sometimes it makes sense, sometimes it does not.”
As for 42%-held Kaap Agri, whose share price has been on a five-year downward trajectory and which has invested heavily in low-return fuel stations, Celliers told shareholders the board is “happy with Kaap Agri to date”.
The surge in the Quantum Foods share price to a high of R9.90 just weeks after Zeder sold its 31% stake to Sovereign Foods for R5 a share, was due to a bidding war, Holtzhausen explained to shareholders. As he saw it, the surge in the share price – to around its net asset value – was a “market-related matter” and was also affected by the limited liquidity of the share … the unstated suggestion being that shareholders should not for one minute suspect that Zeder had not been strategic in the bargain-basement sale of one of its larger assets.
As for any suggestion that some of the long-serving ‘independent’ directors were not in fact independent, Holtzhausen, who moderated the questions, appeared to answer this to his own satisfaction.
He reminded shareholders that the King IV code reference to a nine-year limit for ‘independence’ is only a ‘recommendation’. “If the board is of the opinion a director can apply his mind independently and still make a contribution, that is sometimes more important than just looking coldly at the number of years.”
The happy chair
On the issue of executive remuneration Holtzhausen decided it was time to draw in the very long-serving ‘independent’ chair Chris Otto to reveal whether or not he was “happy” with the remuneration structure.
“Yes I’m happy, whether management is happy I’m not sure,” said Otto, who was rendered almost inaudible by hounds howling in the background.
At this point Zeder’s rather bizarre AGM performance came to a sudden halt – “Good luck to management, thanks for attending, goodbye,” said Otto as he unplugged the meeting.
Evidently no one at Zeder had come across Section 63(2) of the Companies Act. It requires that the electronic communication employed during a virtual shareholder meeting should enable “all persons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate reasonably effectively in the meeting”.
No spontaneous questions
Shareholders who complained about the conduct of the meeting told Moneyweb they had submitted their questions to the board ahead of the meeting. This meant the board did have notice and was not faced with spontaneous questions raised at the meeting as happens at a traditional AGM.
However, 93 minutes later at the PSG AGM, Piet Mouton (CEO of PSG Group, which holds 44% of Zeder), made reference to the unhappiness about the Zeder meeting. “The questions came too late, if you have questions please send them timeously,” he advised shareholders.
It wasn’t just shareholders Mouton advised at the AGM; he also advised the JSE to cut back on its red tape and the government to open up the economy.
“For a company busy trying to come up with a plan to reduce the value-destroying discount between its share price and the underlying net asset value, the ease with which it dispenses advice to third parties reflects a staggering lack of self-awareness,” said one irritated shareholder.