JOHANNESBURG - Shareholders at Merafe Resources, which operates the Glencore-Merafe Chrome joint venture, have rejected the company's proposed hike in non-executive directors’ fees for 2020 given the uncertainty about the Covid-19 pandemic.
During the annual general meeting (AGM) held on Friday, shareholders voted against the proposal for a hike in directors’ fees and questioned the fee hike given the Covid-19 pandemic.
At the AGM, shareholder Bryan Dorfan wanted to know whether the special resolutions to increase non-executive remuneration would be withdrawn in light of the events subsequent to year-end.
“In light of what is going on in the industry and in light of what is going on in the general world around us, would it not have been beneficial to withdraw those resolutions rather than be seen as people who are after money?” asked Dorfan.
Merafe’s chief executive, Zanele Matlala, responded by saying that the company was alive to the realities that had been posed by the Covid-19 pandemic and the national lockdown.
Zanele Matlala
“The way we have considered it, overall it is a 5percent increase, which has a R180000 impact for the year. So we did not think that was the area to show that we are trying to preserve cash. We have implemented various programmes to look at cash preservation, but the non-executive director fees are not one of them given the quantum,” Matlala said, adding that the board had debated the issue extensively.
However, Dorfan was not convinced about the decision to hike directors’ fees even though Matlala said the quantum was low.
“I realise that the quantum is not large. My concern is that you are sending the wrong signal to the market, especially given that everyone has been told to cut back on increases. People are losing jobs. Unemployment is getting high. I feel it is sending the wrong message to the market. As it is, shares are not exactly flying. I have no doubt that Merafe at the moment is still making losses,” said Dorfan.
The special resolution for non-executive directors’ fees for board members failed when 28.4percent voted against, and 71percent of shareholders voted for the resolution.
The special resolution for increasing fees for the remuneration and nomination committee members was also rejected when 28.4percent of shareholders voted against and 71percentsupported it.
In March, Merafe reported that profit for the year ended December 2019 had deteriorated significantly to a R1.36billion loss in 2019 from an R683.4million profit a year earlier, including a hefty R1.8bn impairment of assets.
In January, Merafe announced that it was planning to restructure the Rustenburg smelter and could potentially cut up to 665 jobs at the operation as a result of losses due to the deteriorating market and operating conditions across the South African ferrochrome industry.