PIC vetoes BAT political donations
• Support could cause ‘leniency over antitobacco laws’
The Public Investment Corporation, which manages about R1.8trillion in funds for government employees, voted against giving the board of British American Tobacco the authority to make donations to political organisations and to incur political expenditure.
The Public Investment Corporation (PIC), which manages about R1.8-trillion in funds for government employees, has voted against giving the board of British American Tobacco (BAT) the authority to make donations to political organisations and to incur political expenditure.
The PIC expressed concern about the ethics of tobacco companies making political donations because of the general trend for governments to increase “sin taxes” and create designated smoking areas. “It is the PIC’s view that this may pose an ethical dilemma for the company as sponsoring political parties could lead to governments being lenient on antitobacco laws.”
The BAT resolution was one of 89 resolutions the PIC voted against in the three months to end-July. The PIC, the largest single investor on the JSE, attended 58 shareholder meetings and voted on 991 resolutions in the period. It voted in favour of 902 resolutions. On no occasion did the PIC’s vote against a resolution result in that resolution not being passed.
With the marked exception of BAT, most of the resolutions the PIC opposed related to the reappointment of the auditors, the re-election of nonexecutive directors considered not to be independent and unacceptable remuneration policies.
In the three months, the PIC voted against the reappointment of auditors at 22 companies.
In the case of Nedbank and Standard Bank, which have two external auditors, the PIC voted against the reappointment of both teams of auditors at both banks. In the case of Barclays Africa, it voted only against the reappointment of EY.
The latest PIC voting record indicates this powerful fund manager has strengthened its support for the bid by the Independent Regulatory Board for Auditors (Irba) to enforce mandatory audit firm rotation.
In June, Irba issued a rule prescribing that after 10 years, listed companies had to implement audit firm rotation with effect from April 1 2023.
The PIC is also not letting up on remuneration policies. It voted against the remuneration policies or implementation reports of 21 companies. In most cases, it said that the policy was inconsistent with best practice and, as in the case of Santam, did not provide adequate information. “The detail relating to the awarding of the STI [short-term incentives] and LTI [long-term incentives] is insufficient as it lacks disclosure of performance indicators and distribution of weightings,” it said.
Advtech racked up the highest number of no votes, with seven; six of them related to remuneration, including four on proposed changes to the management share incentive scheme.
PSG and related entities PSG Konsult, Zeder and Curro accounted for 20% of the 89 votes against resolutions.
The PIC voted against reappointing audit firm PwC at PSG, PSG Konsult and Zeder and against the remuneration policies of all four companies.
Lack of independence of socalled independent nonexecu- tive directors seemed to concern the PIC most. The re-election of Patrick Burton and Chris Otto to the PSG board and/or audit and risk committee was rejected as they had served more than 12 years and could no longer be seen as independent.
Three of the independent nonexecutive directors at PSG Konsult were opposed as they were on the PSG board and so not independent.