It’s clear Christo Wiese must go
Christo Wiese’s position as chair of Shoprite Holdings is completely untenable.
At Monday’s annual general meeting (AGM), only 38.8% of ordinary shareholders voted in favour of his re-election as a director. Because of the high-voting deferred shares under the control of Wiese’s Thibault Square Financial Services, the resolution passed.
It is extraordinary that 61% of shareholders who voted would oppose the appointment of a chair.
Wiese has been chair for nearly three decades (since 1991).
But why all this apparent resistance by Wiese to step down?
There is no question that he can continue to add immeasurable value as a director and as a significant shareholder. But it is precisely because of his misjudgements at Steinhoff and Brait that shareholders can no longer trust him to put the interests of Shoprite ahead of his own personal ones.
Following the (forced?) sale of shares last year, he is no longer Shoprite’s largest shareholder.
The Government Employees Pension Fund holds 11.85% versus Wiese’s 10.7%.
A controversial and abandoned proposal – initiated by Shoprite! – to buy Wiese’s deferred shares to simplify the company’s share structure in early 2019 suddenly looks cheap at the price (which equated to R3.3-R3.4 billion, depending on what dates are used).
The voting hurdle was an artificially high 85%, which meant any meaningful dissent would see it fail.
Wiese said it was done this way as he did not want the 200 million additional Shoprite shares if there was significant shareholder pushback.
The reputational hit Wiese has taken following the events at Steinhoff and Brait has certainly not helped.
While many of Shoprite’s African operations are struggling, this doesn’t fully explain the 22% decline in its share price so far this year.
At the time of the deferred share plan, Coronation (with around a 5% holding) told Business Maverick that “the proposal was an extremely high price to pay to extinguish what is, in reality, a comparatively low level of risk”. Was it really? Shoprite clearly sees a future where it is not under Wiese’s control. Given recent scheming, even R5 billion might be a bargain. Then again, this drawn-out poker game may yet spring a surprise.
Hilton Tarrant works at YFM