Coronation told to engage more

The passive investment style of Coronation Fund Managers and its remuneration policy came under attack at the group’s annual general meeting on Tuesday as Chris Logan urged the fund manager to engage more actively with companies in which it is invested and Theo Botha called for more disclosure on how its executives were rewarded.

The passive-investment style of Coronation Fund Managers and its remuneration policy came under attack at the group’s annual general meeting.

Activist shareholders Chris Logan urged the fund manager to engage actively with companies in which it is invested and Theo Botha called for more disclosure on how its executives are rewarded.

Despite persistent questioning, Botha failed to get details about the basis on which longterm bonuses were allocated to individuals. He was told it was a pool of funds allocated to individuals on the basis of their contribution to the company.

Botha queried whether there was any provision for clawing back bonuses and said the longterm scheme could hardly be described as long term, given it was only three years.

“It’s not long term. Once these bonuses are awarded they vest in year one, two and three,” he said after the meeting.

Jock McKenzie, chairman of the remuneration committee, said at the meeting that other shareholders had raised concern about the long-term definition and said the committee would look at increasing it.

“As for clawing back bonuses, in the interests of continuous improvement, we will look at that,” he said.

Botha was concerned about the opaque way in which the CFM Deferred Remuneration Trust operated. The trust, which holds the Coronation shares and unit trusts, which are awarded to employees, is deemed to be independent.

Botha said Coronation was the only company he knew that had a long-term remuneration scheme that operated outside the company.

Logan, of Opportune Investments, urged Coronation to be a more decisive corporate citizen, saying: “There’s been an outbreak of activism in the wake of the numerous scandals such as Steinhoff. Are you planning to become more active?”

Coronation, which had one of the largest institutional fund exposures to Steinhoff, has estimated it has lost R9bn on the investment.

Logan mentioned Dawn, in which Coronation was a major shareholder. “That was a mini Steinhoff and the guys behaved like mini bandits but Coronation wouldn’t intervene,” he said.

If shareholders did not intervene. the banks eventually would, he said. “When that happens it’s almost too late.”