Shareholders representing 75percent or more of the shares in listed groups need to approve remuneration policy and implementation report resolutions, before the resolutions are carried, but increasing shareholder activism has seen a number of these resolutions fail.
On Thursday, 31percent of Tsogo Sun shareholders voted against the non-binding remuneration policy and implementation report, and Tsogo management invited shareholders who voted against the resolution to engage with them by November 12. Similar resolutions also failed to be carried at Shoprite, Absa Group and Old Mutual’s last annual meetings.
A partner at an auditing firm, who wished to remain anonymous, said on Friday that while these fees were usually performance based, it was not always the high value of the director’s remuneration that shareholders objected to.
Other factors played a role, such as how closely the shares were held; the fairness of the directors’ remuneration, given the high income disparities in South Africa; what contribution the directors could reasonably be expected to make at the firm in those circumstances; and the alignment of management with shareholder interests.