Giving due credit in bad times
Release of report is commendable, given distraction of the Mpati commission and the fact the PIC doesn’t have a board
The good news is that the PIC has not allowed its seemingly endless reputational woes to distract it from its corporate governance commitments.
Indeed, in considerably faster time than at any stage in the previous several years the country’s largest fund manager has released its proxy voting report for the three months ended September 2018.
It comes just weeks after the release of the end-june voting results and takes the PIC back towards its 2005 relaunch commitment which, as then president Thabo Mbeki said, was “to take a more active role in discharging their
[fund management industry] responsibilities as shareholders”.
It’s all the more commendable an achievement given the huge distraction of the Mpati commission of inquiry and the fact that the PIC currently doesn’t have a board, which itself is probably a contravention of all sorts of governance codes.
But if ever there was a time the PIC could have argued it was too busy or distracted to bother releasing the results of its proxy voting, now would have been it.
So, well done to it for making a special effort to demonstrate that it is about more than the odd dodgy investment deal and that it does take its oversight role seriously.
Unfortunately, and here’s the bad news, the report reads like something that was generated by an automatic formula rather than a team of highly skilled corporate governance analysts.
After reading years of PIC voting reports it’s impossible not to see a pattern: it is the fine art of box-ticking, enabled by the industry that runs our corporate governance regime.
During the three months to end-september, the PIC voted against several remuneration policies that appear “inconsistent with best practice”.
For example, it was one of the many shareholders that voted against Naspers’s remuneration policy despite the considerable effort the group’s remuneration committee put into engagement with shareholders last year on its controversial multibillion-rand policy.
However, it’s the PIC’S comment on the decision to vote against the appointment of Rachel Jafta to Naspers’s audit committee that hints at resource constraints.
“The PIC questions the independence of the director since he has been on the board for more than 12 years,” says the PIC’S report. Yes, Jafta’s a woman and the PIC doesn’t seem to know it.
The PIC’S 12.37% stake in Naspers is worth around R166bn and has helped to shelter the fund manager’s performance figures from the full impact of its many ill-considered investments. At the very least this surely justifies better knowledge of long-serving directors.
It’s also impossible not to notice that SA’S most powerful fund manager is dealing with a slew of repeat offenders. Time and again it votes against the same resolutions at AGMS: directors allotting shares, nonindependent directors, inadequate remuneration policies and reappointment of long-serving auditors. Nobody seems to pay a blind bit of notice. And why would they? There appears to be little or no follow-up.
Shareholder activist Theo Botha, who works for proxy voting service Proxy View, says there’s not much point in voting at AGMS unless the shareholder follows up with engagement on issues of concern.
“It’s pointless to vote against a resolution at