TFG pay policy a heated issue
• At annual meeting, 30% of investors vote against remuneration strategy
Just more than 30% of TFG shareholders remained unconvinced by 2016’s engagement with the board over the group’s remuneration policy and voted against it at Wednesday’s annual general meeting.
Just more than 30% of TFG shareholders remained unconvinced by 2016’s engagement with the board over the group’s remuneration policy and voted against it at Wednesday’s annual general meeting.
Although a substantial improvement on the hefty 47.3% vote against the remuneration policy in 2016, the 30% remains level of opposition for concern. At the 2015 meeting, 23.35% of shareholders voted against the remuneration policy.
Group CEO Doug Murray said on Thursday the latest vote was regrettable, but it represented a substantial improvement on 2016. “We make a great effort to engage with all our shareholders, we try get feedback on the remuneration report before it’s finalised,” said Murray, who added that not all the big shareholders engage with the board.
He said ahead of the annual meeting, the remuneration committee had been encouraged by the positive response it had received to the 2017 policy.
In the group’s 2017 annual report, remuneration committee chairman Eddy Oblowitz described the 2016 vote as disappointing, “especially after our deliberate and in-depth engagement with the investor community” after the 2015 annual meeting. After the 2016 vote, the committee also engaged with investors and explained the policy’s approach to remuneration.
“In light of our progressive approach, we look forward to your positive vote in favour of our 2017 financial year remuneration policy,” Oblowitz wrote at the end of June. At the annual meeting about two months later, 30% remained negative.
The Public Investment Corporation (PIC), which owns 11.7% of TFG, voted against the remuneration policy at the 2016 and 2015 meetings. In its proxy voting report on TFG’s 2016 meeting, the PIC said there was inadequate disclosure around the performance criteria for both short- and long-term incentives. It also criticised the single performance condition for awarding short-term incentives, describing headline earnings per share as easy to manipulate. “Best practice recommends that companies must have multiple performance measures to avoid manipulation of results of poor business decisions.”
Shareholders were also concerned that share-based awards were made on performance targets that did not stretch management sufficiently.
On Thursday, the PIC did not respond to a request for comment on TFG’s 2017 policy.
The remuneration policy was not the only issue that raised shareholder concerns. Just more than 15% of shareholders voted against the reappointment of KPMG, which has audited TFG for 46 years.
About 24% voted against Fatima Abrahams’ election to the audit committee and 21.3% voted against Sam Abrahams’ election to the same committee. Fatima Abrahams has been on TFG’s board since 2003 and Sam Abrahams since 1998. Both are described by TFG as independent nonexecutive directors. In 2016, the PIC voted against Sam Abrahams’ reappointment as a director, saying it questioned his independence due to his long service on the board.
At Wednesday’s meeting, Murray described the group’s performance in financial 2017 as “satisfactory” given the challenging trading conditions and political and economic uncertainty across all the territories in which the group operates, which includes Africa, Australia and the UK.
“As always, the second half of the year is heavily dependent on Christmas trading, which will largely determine the performance in the second half.”
At R144, the share price is significantly off its 12-month high of R174 and far short of the R200 it touched in 2015.