Safari lashed over consulting fees
The board of property group Safari Investments was berated at its annual general meeting after it admitted to paying consulting fees to nonexecutive directors as shareholders watched their investments wash away in recent years
The board of property group Safari Investments, which owns malls in towns and rural areas, was berated at the group’s annual general meeting (AGM) after it admitted to paying consulting fees to nonexecutive directors as shareholders watched their investments in the group wash away in recent years.
Minority shareholder and Opportune Investments chief investment officer Chris Logan said in a question-and-answer session at the AGM it was worrying that the company had paid fees to nonexecutive directors and that these payments had increased fourfold to about R2m in the past year.
Logan said the independence of nonexecutive directors is compromised if they are paid consulting fees as this creates a conflict of interest.
Outgoing chair Allan Wentzel said the fees were for “ad hoc after-hours work”. The directors had spent these hours doing work that included looking at Heriot ’ s takeover offer.
“The quantum of the fees won’t be repeated,” he said.
Safari CEO Dirk Engelbrecht said even though the fees were called consulting fees, they were being misinterpreted by Logan and other critics.
But Logan’s criticism seemed to be supported when it came to voting for the various resolutions proposed at the AGM.
He said it was notable that the longest-standing nonexecutive director, Kiki Pashiou, had been voted off the board. Logan said this was because Pashiou had been involved in various related-party transactions at some cost to shareholders.
“The voting results were a stinging rebuke for the Safari board and its repeated failure to secure shareholder value.
“Kiki Pashiou, who was a founder and key player in the extensive related-party transactions, was voted off as a nonexecutive director, and the nonexecutive directors fees special resolution failed, meaning the nonexecs cannot be paid,” Logan explained.
Some sort of meeting will need to be held to consider what will happen with nonexecutive pay, Logan said.
Pashiou and Engelbrecht could not be reached for comment.
A number of new directors were voted onto the board on Monday, including incoming chair Greg Heron. Another minority shareholder, Albie Cilliers of Cilandia Capital, said this effectively means there is now a new board that will be able to properly monitor Safari.
He said that since listing, shareholders have suffered a decrease in net asset value from R9.20 to R7.69, while debt has increased significantly because of bad capital allocation decisions and development losses that had been suffered as a result of related parties unduly influencing the board.
Logan and Cilliers have spent more than a year tussling with Safari. They have criticised the board and management for turning down takeover offers while failing to grow Safari.
Safari turned down takeover offers from Community Property Company ( ComProp) in 2019 and Heriot earlier in 2020, which had been at levels well above its prevailing share price.
Safari, which has a market capitalisation of R1bn and a retail portfolio including malls worth R3.3bn, saw its share price close 2.99% lower at R3.25 on Monday, down 9.7% year to date and 59% on a five-year basis.
In July 2019, unlisted group ComProp offered R1.8bn, or R5.90 a share, but Safari’s board turned down this offer, saying a large group of its shareholders had indicated they were against the offer. The board said it would be a waste of money to further consider the offer.
In early 2020, sharholders turned down an undisclosed offer from listed group Heriot, which owns close to R5bn worth of township retail centres. Wentzel said talks between Safari and Heriot fell apart as the offer was not attractive enough.