A major criticism of the JSE has been that boards are often too passive are bullied by high-profile or charismatic executives who hold significant sway [but little accountability] when it comes to decisions around strategy and remuneration.
In light of diminishing returns and questions marks around executive remuneration, shareholders are beginning to take a more active role in challenging boards of JSE-listed businesses.
In this post, we highlight some of the interesting votes from shareholder meetings last week:
1. The JSE took the unusual step of posting a general Stock Exchange News Service (SENS) announcement initiated by investors comprising 12% of the issued shared capital in Grand Parade Investments who are agitating for the removal of existing non-executive directors to be replaced by new non-executives. The directors argue that the current board has accumulated significant losses and the executive does not have the requisite skill and governance controls to stem the flow as the business enters new markets.
2. The FirstRand board meeting saw pushback with 16% of shareholders voting against the re-election of Nolulamo Nobambiswano (Lulu) Gwagwa (Appointed 2004) as a non-executive and 23% voting against Paballo Makosholo (Appointed 2015) as a non-executive. 25% voted against the change in designation for Jannie Durand while 25.6% voted against the remuneration policy.
3. The Woolworths AGM saw 24.5% of shareholders vote against the re-election of Andrew Higginson (Appointed 2012) as a non-executive director. 29.5% voted against the re-election of Ernst & Young as the external auditors while 20% voted against the remuneration policy and 39.7% voted against the Remuneration Implementation Report.
4. Ellies have become embroiled in a board tussle around the appointment of Elliot Salkow as executive chairperson of the business
5. The DRDGold AGM saw 17.6% of shareholders voting against the remuneration policy
6. Blue Label Telecoms saw 26% of shareholders vote against the remuneration policy and report
7. Remgro saw 28% of shareholders represented vote against the re-appointment of Paul Harris as a non-executive director and 32.5% vote against Fred Robertson to remain on Audit and Risk Committee.
8. Dr. Mdu Gama saw 16% of shareholders vote against his reappointment as a non-executive to the Mustek board and 19% voted against reappointment to the Audit and Risk Committee. 18.5% voted against the remuneration policy and remuneration report.
9. MAS Real Estate saw 27% voting against its remuneration policy and 20% against its remuneration report.
10. 12.9% of shareholders voted against the re-election of Christopher Seabrooke as non-executive chairperson at Metrofile and 12.9% voted against the re-election of Graham Wackrill to the board
11. At insurer MMI, 31.5% voted against the re-election of Khehla Shubane while 15% voted against Andrew Taylor’s appointment as the audit partner while 38% voted against the Remuneration Implementation Report.
12. At the Stellar Capital Partners AGM, 17% voted against the resolution to allow the company to issues shares for cash.
13. The Clover AGM saw 35.8% of shareholders vote against the re-election of Dr Steve Booysen to the board and 29.6% voted against his re-election to the Audit and Risk Committees. 18.4% voted against the re-appointment of Ernst & Young as the external auditors at Clover.
14. 44.7% of shareholders voted against the Remuneration policy at services group Primeserv. 44.7% of shareholders also voted against the Remuneration policy for non-executive directors as well as their appointments.
15. Insurance group Discovery saw 16.8% of shareholders vote against the re-election of Sindi Zilwa to the Independent Audit Committee 18.8% vote against Sonja De Bruyn to the same committee. De Bruyn also had 20.5% of shareholders vote against her reappointment as a non-executive Dr Brian Brink and Dr Vincent Maphai had 18.1% and 16.6% vote against their re-election as non-executives. 31.5% voted against the group remuneration policy.
In light of low equity returns and a focus on improved governance in JSE-listed businesses, active managers and shareholders are starting to apply pressure to boards and executives to justify how they allocate shareholder capital.
It is clear that it is no longer “business as usual” and the gloves are coming off as shareholders begin to hold executives to greater account.