CAPE TOWN – Brait’s share price slid more than 5 percent to R11.20 on Thursday afternoon as the market digested details of its annual general meeting (AGM), where not all resolutions were passed and a proposal for a new management incentive scheme was withdrawn before the meeting, which could flag shareholder discontent.
Christo Wiese, the owner of 36 percent of the shares in issue at investment group Brait, was re-elected with 70 percent of the votes at the AGM that was held in Malta on Wednesday.
An extraordinary resolution relating to the renewal of the board's authority to withdraw statutory pre-emption rights did not pass though, achieving a 72.4 percent vote in favour, relative to the required 75 percent.
Statutory pre-exemption rights relate to when and where new shares in the company are issued, the existing shareholders have an automatic right of first refusal to purchase these shares in proportion to their existing shareholdings.
Also, after the company "took into account input from various shareholders on the proposed ownership equity plan,” a resolution to approve the plan was withdrawn prior to the annual general meeting.
The ownership equity plan for a range of Brait insiders, proposed on July 1 this year, involved the proposed creation of non-voting “B” shares.
An analyst who chose to remain anonymous said the voting, which effectively restricted the issuing of shares by the board for any new big acquisitions and prevented the granting of new incentives to management, indicated that some of Brait shareholders were tired of the value destruction at the group.
“How could they propose a new incentive scheme for management when there was so much value destruction last year… remember this share price has a ceiling of R170 a share,” the analyst said.
The rest of the proposed board of six directors were re-elected, all with more than 90 percent of the votes. The analyst said the voting also indicated that some of the shareholders were upset with the participation of Wiese.
Brait’s net asset value per share was R41.80 at March 31. The annual report said recently its management's focus was to reduce debt and grow net asset value, after its decline that was largely brought on by an investment in UK retailer New Look. In May, New Look completed a balance sheet restructuring.