Exec pay at Nampak: Enough’s enough, say activists
Shareholders slam CEO’s R7.2m retention bonus
An unexpected R7.2-million retention payment made to Nampak CEO Andre de Ruyter appears to have been behind shareholder opposition to the group’s remuneration policy at last week’s annual general meeting.
The retention payment was paid in July 2017 “in recognition of the performance and contributions made in the 2016 financial year”, according to the group’s 2017 remuneration report. However, there was no reference to a retention payment in the 2016 remuneration report, which means it was not part of shareholders’ consideration when they voted on the remuneration policy that year. The non-binding vote on the 2016 remuneration policy received the backing of 99% of shareholders. At Nampak’s recent AGM 37% of shareholders voted against the remuneration policy.
Shareholder activist Theo Botha, who attended the AGM, said the poor level of disclosure made it appear that the payment had been backdated.
“At last year’s AGM shareholders approved a remuneration report and policy that made no reference to any retention payments but the 2017 annual report now reflects that De Ruyter received R7.2-million for financial 2016.”Botha says concerns around retention were only raised in the 2017 annual report. He queried why the retention matter had not been raised in 2016. In 2016, when the company’s earnings were hit by currency issues in Angola and tough economic conditions in Nigeria, De Ruyter received a short term incentive of just R2.4-million and minimal long-term share awards for a total remuneration package of R10-million.
Botha questioned whether the retention payment was appropriate given that shareholders have not received a dividend for the past two years and the share price has been on a downward trajectory since 2014 when it peaked at R44. It is trading at R14.
The remuneration committee said the retention awards were made after discussion with “certain shareholders” during 2017. At the AGM remuneration committee chairman Peter Surgey said the discussions had been with Allan Gray, which holds 27% of the group, and the PIC, which holds 10%.Allan Gray confirmed they had discussions with Nampak nonexecutive directors in both 2016 and 2017 and discussed retention payments at both meetings. At the 2016 meeting they opposed the retention payments but at the 2017 meeting “agreed to support the remco to do what they have to do in order to retain the execs on the condition that the quantum was not excessive and that they use a long lock-in period of three years”, said a spokesperson from Allan Gray.
She said the fund manager was generally opposed to retention payments with no performance conditions. “In this case, the remco engaged with us proactively and was transparent about it and we decided on balance it was better for shareholders to support it.”
The PIC did not respond to a request for comment.
Botha said none of the other shareholders benefited from the transparency and queried whether the three-year lock-in period began in 2016 or 2017.