I am the Godfather: Assore boss
Sacco spells out how things get done at mining company as pay policy is put to the vote
“I AM the godfather, I look after my people,” Des Sacco, chairman of chrome and iron-ore miner Assore told shareholders at the company’s AGM last week.
In a divergence from the King corporate governance code, Sacco made it clear that his company had no official remuneration policy. Astonishingly, this did not stop the board putting its remuneration policy to shareholders for an “advisory vote” at the AGM.
Remuneration has come under the spotlight recently with the publication of the Sunday Times Rich List, which lays bare the investment holdings and salaries of company executives. The list provides a comprehensive way for shareholders and pensioners to work out where their money is going.
Sacco, who appeared at number four on the Rich List with a wealth of R10.34-billion thanks to his 23.8% of Assore, he also earned R4.26-million in the year to March.
But little else is known about Sacco, and the company has a reputation for keeping its head below the radar.
Peter Major, head of mining and resources at Cadiz Corporate Solutions, said of Assore: “I don’t think there is a more secretive company.”
Through its 50% shareholding of Assmang, which provides it with about 90% of its profit, Assore owns some of the richest manganese and iron-ore holdings in the world.
The company is a family affair, founded in 1928 by Sacco’s grandfather. In 1968, Des joined the business, and by 1992, he was chairman and managing director of Assore.
At Assore’s AGM, shareholder activist Theo Botha queried how the company paid its bosses given that there were no clear measures or performance indicators in the annual report that shareholders could use to determine why Sacco was paid a salary of R4.3-million.
The report says only that bonuses are “based on the results and performance of the group for the year”.
Botha pointed out that CEO Chris Cory’s bonus of R14.4-million had dropped just 3% from R14.9-million the previous year, while the company’s profit had fallen 15% from R4-billion to R3.4-billion. At the same time, earnings per share dropped 13% from R38.28 to R33.19.
Botha said he could see no correlation between remuneration and the company’s profitability.
Assore’s deputy chairman, Ed Southey, said it considered the “individual performance and the performance of the group. [Remuneration] had to be seen in the context of how the group had performed, the exchange rate, the price of iron ore.
“Simply to go on the results of the group would not be fair,” he said.
But after more questions, Southey finally admitted that there was “no general policy” on remuneration.
Botha asked: “But if there is no policy, how can you expect [shareholders] to vote on a policy?”
Sacco then took to his feet and described how things were done at Assore. “This is a very special company … I find good people and I look after them. I am the godfather, I look after my people.”
He said he got no bonus and was simply paid a salary despite having run the company for 46 years. The annual report, though, says that Sacco was paid a R355 000 bonus.
But if there is no policy, how can you expect [shareholders] to vote on a policy?
Sacco said instead it was all about teamwork. “I have always been a team player, I played rugby and other team sports … we have a wonderful team here.”
Though Assore is publicly owned by 1 982 shareholders, this is the first time that it has come under intense public scrutiny. It has been shielded to some extent by its stellar performance, which has seen it remain one of the top performing shares on the JSE, but its share price has dropped 7.8% in the past year as mining shares came under pressure.
As the meeting ended, an exasperated Sacco said: “This is the longest AGM we’ve ever had”.
Speaking to Business Times afterwards, Cadiz’s Peter Major compared shareholders of many JSE-listed companies to citizens of a country who elect people into power but fail to make them accountable. Despite Assore apparently having no remuneration policy, more than 87% of shareholders at the AGM voted to approve the remuneration policy.
Though the vote on remuneration is not binding on JSE companies, it is an important indicator of shareholders’ views on executive pay.
After the AGM, Sacco defended his management style, pointing to Assore’s excellent performance. In 2011, it was the top performing public company over five years. A R10 000 investment in 2006 would have returned an eye-popping R73 751 in 2011. Comment on this: write to letters@businesstimes.co.za or SMS us at 33971 www.timeslive.co.za