FIRSTRAND missed the requisite shareholder support for its remuneration policy by the skin of the teeth during the 2021 annual general meeting held virtually yesterday.
All resolutions were passed with the requisite voting requirements with the exception of the remuneration policy and the remuneration implementation report despite the group drumming up support for the resolutions.
FirstRand, whose subsidiaries include First National Bank, Wesbank and Rand Merchant Bank, received 74.11 percent of shareholders support for the non-biding advisory vote for remuneration policy. A total of 48.75 percent of shareholders voted in favour of the non-biding advisory vote for the remuneration implementation report.
This is the second consecutive year FirstRand’s remuneration policy and implementation report have not met the 75 percent threshold set by the listings requirement.
During the 2020 AGM, only 69.59 percent of the shareholders voted for the remuneration policy while 41.32 percent of them supported the implementation report. Among others, shareholders were concerned that the Covid-19 awards in 2020 were not subject to performance conditions and Covid-19 awards recipients would benefit from a share price uplift.
Commenting on the results yesterday, group chairman Roger Jardine said the group would continue to reach out to shareholders. He said the board had engaged extensively with shareholders on remuneration after shareholders had voted against the policy last year.
“We hosted over 30 meetings on this topic alone. This level of engagement was undertaken because the management and board took the voting outcomes last year very seriously. We took shareholder feedback directly into the deliberations of the remuneration committee. As a result the material issues raised last year were actually dealt with directly and many shareholders have acknowledged the level of progress made,” said Jardine.
Speaking during the AGM, concerned shareholder Asief Mohamed asked yesterday: “In light of the insensitivity to many South Africans who suffered job losses during Covid-19 FirstRand decided to award Covid-19 awards to well paid executives in 2020. Can you indicate the value of the Covid-19 awards?”
Chairman of the remuneration committee, Louis von Zeuner, responded by saying Covid-19 awards were specified in the remuneration report.
“After the previous year’s AGM there were comments raised about not having performance criteria to that instrument and that we have put that in place. The first tranche vested in September 2021, that is a third of it. The Covid-19 instruments represent 50 percent of what was awarded in 2017, 2018, 2019 with two of those not vesting and a possibility that the third will also not vest,” said Von Zeuner.
According to FirstRand’s 2021 remuneration report, the 2021 short-term incentive (STI) pool increased 45 percent compared to the prior year driven mainly by the 54 percent increase in normalised earnings.
The group’s economic profit, or Niacc, which is its key performance measure, was R4.9 billion in the current year compared to a negative R1.443bn in the prior year. The group posted an improved return on equity from 12.9 percent to 18.4 percent. Normalised earnings grew 54 percent to R26.6 bn. The group’s affordable housing book has grown to R34.8bn representing 116 182 customers.
This book is focused on providing access to housing finance to lower-income groups.
The AGM heard the group is aiming to have more female representation on the board.
BUSINESS REPORT ONLINE