Wages: the highs and lows

Stark dif­fer­ences in the salaries of nonex­ec­u­tive di­rec­tors show a com­plete ab­sence of con­sis­tency across com­pa­nies

Financial Mail - - EXECUTIVE PAY - Marc Hasen­fuss hasen­fussm@ti­soblack­star.co.za

Ex­ec­u­tive pay can hit a nerve with in­vestors — but re­cent devel­op­ments sug­gest share­holder opin­ions can dif­fer vastly on the stipend that is ap­pro­pri­ate to di­rec­tors.

Last week poul­try group As­tral Foods — the epit­ome of a no-frills cor­po­rate cul­ture — found it­self in the in­vid­i­ous po­si­tion of not be­ing able to pay nonex­ec­u­tive chair The­uns Eloff his R1.1m an­nual re­mu­ner­a­tion.

Share­hold­ers voted down the res­o­lu­tion at a gen­eral meet­ing.

This was af­ter share­hold­ers voted against the spe­cial res­o­lu­tion around Eloff’s re­mu­ner­a­tion at an AGM in Fe­bru­ary this year.

Eloff is largely viewed as a hard-work­ing nonex­ec­u­tive who has added value to As­tral’s board. It is un­der­stood mainly off­shore share­hold­ers us­ing a proxy vote ser­vice voted against the res­o­lu­tion.

In stark con­trast, share­hold­ers in spe­cial­ist re­tailer Home­choice In­ter­na­tional over­whelm­ingly voted in favour of a non­bind­ing ad­vi­sory vote on the com­pany’s re­mu­ner­a­tion pol­icy and its re­mu­ner­a­tion im­ple­men­ta­tion re­port.

The vote was reg­is­tered de­spite Home­choice nonex­ec­u­tive di­rec­tor Rick Gar­ratt earn­ing a hefty R10m in fees.

Notes in the an­nual re­port show that Gar­ratt — the founder, for­mer CEO and ma­jor­ity share­holder in Home­choice — has “a con­sul­tancy agree­ment with an SA sub­sidiary from which he earns con­sul­tancy fees and other re­lated ben­e­fits”.

Gar­ratt hit the head­lines about 15 years ago when he con­tro­ver­sially bought out mi­nor­ity share­hold­ers in the old Home­choice and delisted the com­pany from the JSE.

Home­choice in­di­cated re­cently a will­ing­ness to raise fresh cap­i­tal by plac­ing new shares with in­vestors, an ex­er­cise likely to be cou­pled to pro­pos­als to al­low ex­ist­ing large in­vestors — in­clud­ing Gar­ratt — a chance to sell off some of their share­hold­ing.

To put Gar­ratt’s re­mu­ner­a­tion in con­text, Syd Muller earned R794,000 as chair of newly delisted sports and out­door goods re­tailer Hold­sport, while the to­tal pay to nonex­ec­u­tives was just R1.7m in fi­nan­cial 2017.

An­other spe­cial­ist re­tailer, Kaap Agri, paid its nonex­ec­u­tives R1.9m in fi­nan­cial 2017. Kaap Agri’s to­tal ex­ec­u­tive re­mu­ner­a­tion costs came in un­der R11m.

By way of fur­ther com­par­i­son, the to­tal ex­ec­u­tive re­mu­ner­a­tion at Home­choice — which has an an­nual turnover of R3bn — was al­most R21m for fi­nan­cial 2017.

The Fos­chini Group (TFG), with an an­nual turnover of R23.5bn, showed a to­tal re­mu­ner­a­tion bill of R20m in fi­nan­cial 2017.


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