Right on the money

Allan Gray stands out as the fund manager that has given the most consideration to executive pay packages at listed companies

If you take executive remuneration seriously, it might be time to look into who is managing your money.

If you like to think your money manager interrogates remuneration policies and only votes on them after careful consideration of the issues, it may be time to think of dumping Coronation Fund Managers, Investec Asset Management and Stanlib Asset Management, and turn instead to Allan Gray or perhaps Old Mutual.

Tucked away on page 17 of Pwc’s latest report on executive remuneration is one of the most useful and chilling bits of information you’re likely to come across in the highly charged environment of executive pay. It’s an account of how the big fund managers voted on executive pay at the JSE top 40 companies in 2016.

Coronation voted in support of remuneration policies in a remarkable 94.3% of the cases; Stanlib voted in favour 90% of the time; Investec voted in favour 85% of the time and Old Mutual voted in favour

67% of the time.

The hands-down winner, in terms of applying its mind to a highly sensitive matter, is Allan Gray, which voted in favour of remuneration policies in only 58% of the cases.

The Public Investment Corp scored 43%, but it’s not an option for private sector funds.

Pwc’s report said that half the large shareholders increased their “no” votes on remuneration last year “and we expect this trend to continue”.

Still, voting in favour of something 85% or more of the time should set off alarm bells; at worst it suggests capture, at best it suggests that little consideration has been given to the matter. It is interesting that the asset managers who largely voted in favour of remuneration policies are all part of listed entities.

Furthermore Coronation, Standard Bank and Investec’s top executives regularly feature on the list of the most overpaid executives on the JSE.

Shareholder activist Theo Botha attends Coronation’s AGM each year in a vain bid to get some insight into its policy of ring-fencing 30% of its annual pretax profits for key employees.

Coronation’s own remuneration