Are SA’s asset managers starting to find their activist voice?
Aggressive activism — outside of politics — isn’t a popular pastime in SA. We’re more likely to gripe than gun for wayward executives. Which is why the overhaul of Group Five’s board is a big deal. Business Day spoke to the retail investor’s corporate crusader, Theo Botha.
Do you think asset managers are actually more activist than we give them credit for?
I wouldn’t say they’re activist, but there are companies that have set up a communication channel where substantial shareholders can engage with them. In those meetings [investors] can discuss what they really want to discuss and they can say, “Hey, I don’t think the governance is good”.
But those meetings should be documented. They could be discussing issues which have a fundamental effect on the company’s future income.
In a way, those asset owners and asset managers get an inside track, don’t they? Often I sit in meetings and they’ll say, “Well, off the record,” and release the information. In so doing, they make you part of an inside club.
So how do you resolve those issues?
Well, you can take minutes of the meeting and release those to shareholders.
Is the Promotion of Access to Information Act (PAIA) helpful for shareholders if they feel they’re being stonewalled by a company?
First of all, I hate using PAIA because when I ask for something, whatever I request is reasonable — I don’t go out of my way to ask for something I shouldn’t have.
So, for example with Coronation — they didn’t put forward their remuneration policy to shareholders, so I just asked for it. And they refused to give it. So then I handed over the PAIA at the AGM [annual general meeting]. It’s an embarrassment to the company, that’s what I’d say. And at Naspers, I specifically asked for the remuneration policy and they refused to give it to me because I’d bought my shares a couple of weeks after the AGM and they felt that only shareholders before the AGM were entitled to it.
I think it’s a total embarrassment for [Naspers CEO] Koos Bekker and it’s a sad reflection on how that company runs its business. As soon as he got the PAIA, we got the remuneration policy.
Do SA’s company laws and JSE listings requirements give shareholders enough protection, in your view?
I think we’re weak on class action. We don’t see class action as you would in America or Europe. I think that’s a problem. I don’t think we have protection of minority shareholders when they lose money. We just don’t hear of that in SA.
Should there have been a class action against MTN when they lost all that money in Nigeria?
Flip, there should definitely have been because there was an issue — a director didn’t do what should have been done and it cost the company and shareholders money.
In America, you can get [a hostile shareholder] from a guy who only owns 5% — and they can drive a point. Here a guy owns 5% and the company will laugh at you.
Having said all this, are asset managers becoming more vocal?
We are starting to see some asset managers starting to vote against remuneration policies and not just ticking the boxes. My problem with the PIC [the Public Investment Corporation, the JSE’s biggest shareholder] is I don’t think they’re properly resourced to do what they need to do.
If [asset managers] don’t perform, then the money is out the door. So, it’s a bit like two to three years ago, RECM didn’t perform and suddenly money was being withdrawn from their fund. Therefore, they’re under pressure.
You have to have a balance between looking at your investment over a long-term basis and looking at it from a governance perspective.
Do they have the right composition of board members and do they have the right skills set? Or are they just there because they knew somebody on another board they sit on? Shareholders should be asking themselves: how did this guy get here? People say we don’t have enough executive directors, we don’t have enough nonexecutive directors — but we have a lot of nonexecutive directors who don’t get the opportunity to sit on boards because people are comfortable with who they know.
Can shareholder activism be a bad thing?
When Allan Gray came in on Johnnic [a previous incarnation of Business Day owner Tiso Blackstar] and said we want you to sell DStv? I was so against that.
Shareholders came together, not for the greater good of the company. They put two directors on the board and forced it to sell [an asset].