Shareholders grill Nampak over stock’s loss of value

Nampak shareholders on Tuesday put the company’s board and management in the firing line over loss of value in the stock and the execution and size of capital expenditure and remuneration of directors.

Africa’s largest packaging manufacturer has faced various struggles in a number of its markets, including hyperinflation in Zimbabwe, the devaluation of the Angolan kwanza, uncertainty about Brexit in the UK and lethargic economic growth in SA.

In the past 10 years, Nampak’s share price has fallen 77.20%, while the JSE’s all share gained 116.17% in the same period.

Nampak’s share price was down 5% to R3.61 on Tuesday. The stock is down 47.14% since the beginning of 2020.

In the 2019 financial year, the company’s headline earnings per share dropped 69%.

Eskom CEO André de Ruyter headed Nampak until he recently joined the troubled power utility.

Speaking at the company’s annual general meeting (AGM) in Johannesburg, shareholder activists Theo Botha and Chris Logan were critical of the company’s performance and decisions.

Citing the company s poor performance over the’ years, Botha questioned Nampak chair Peter Surgey’s fee of R1.8m.

“Since the last AGM, shareholders have lost 70% of their investment [and] over five years the shareholders have lost 90% of their investment. Five years ago, we paid the chairman of the group R1.5m,” Botha said.

Given Nampak’s market capitalisation of R2.49bn, the chair’s fee was excessive, he said.

Botha said Bidvest, which has a market capitalisation of more than R70bn, paid its chair R1.6m, while Astral Foods, with an R8.77bn market capitalisation, paid its chair R900,000.

Simon Ridley, who chairs the nomination and remuneration committee, said the fee was indeed higher than the market average of R1.5m for similar companies.

However, he defended the chair’s fee, saying that “given the turnaround we have been going through, Surgey is putting in a lot of time and effort. I see him literally on a weekly basis. As a committee, we are satisfied that we are getting sufficient return for that premium. Clearly as time goes, this will be reviewed, said Ridley, who also chairs the”audit and risk committee.

Logan also criticised Nampak’s investment in capital projects. Between 2011 and 2019, the company had spent more than R11bn on capital projects, he said. He accused the company of “misallocation” of money.

Nampak CFO Glenn Fullerton said since 2015 the company’s investment in capital projects had decreased from R2.2bn to R735m. Fullerton said the company had since set up a capital allocation committee.