Now, about Basson’s R1.7bn

Shoprite shareholders’ meeting will be a crucial event

The next 12 months should produce interesting annual reports and AGMS, given the slew of retirements we’ve seen recently. Some of these people will not have gone quietly, or rather, will not have gone cheaply.

Thanks to better disclosure rules we already know how much it cost Net1 to persuade Serge Belamant to leave. And though his exit bill (about US$20M, including a generously priced repurchase of his share options) was a bargain compared with the damage his continued presence would have inflicted on the company’s reputation, shareholders were not happy.

Allan Gray was moved to outrage and wondered how Belamant was able to negotiate such an “extravagant” deal. The company did manage to save a few bob when it subsequently terminated the possibly pointless consultancy arrangement it had put in place with the former CEO.

Allan Gray had outrage to spare after dealing with Net1, and it went on to castigate the paying of multimillionrand ex gratia severance payments to executives.

It expressed regret that shareholders are unable to block such payments and said it had recommended to the JSE, for its listings requirements, and the King 4 project team that material severance payments to executives should be put to a binding vote by shareholders.

It’s rather comforting to know that on this matter people pay as little attention to one of the most powerful fund managers in SA as they do to the odd media commentator.

But we can be sure that Allan Gray, as one of the few fund managers that takes executive pay seriously, will trawl through annual reports to sniff out signs of ex gratia generosity.

The most effective way to pay out on resignation lies in the treatment of the share options. There’s usually flexibility in the application of rules to encourage a quiet exit.

And what about the interest-free loan Tsogo Sun gave Marcel von Aulock to buy shares at R25.75 apiece in July 2014?

Given the share price performance over the past few years, it didn’t prove to be much of an incentive. Presumably the loan must be repaid on his departure, which means whatever shares he bought will have to be sold. This in turn means that unless some agreement is reached, Von Aulock will be showing a loss.

We don’t have to wait long for the really big executive remuneration event of the year. The general meeting of Shoprite shareholders, called to vote on whether to give former CEO Whitey Basson R1.7bn, is set for early September.

There’s no doubt Basson was the best retailer SA has seen in decades. But the fact is, he has left Shoprite and no matter how much money he is given, he won’t be returning.

How will fund managers, who were never made aware of this hefty liability, explain to their clients why they voted in support of the resolution? In the hope it will encourage greater commitment from the remaining executives? Hardly.

Whatever happens it will be an interesting event.

Basson has left Shoprite and no matter how much money he is given, he won’t be returning