Gatvol Coronation investors cry foul at AGM
Fund manager gets the full activist treatment
Active Shareholder is the latest activist investor to express concerns about Coronation Fund Managers’ controversial remuneration policy and said it will vote against it at Tuesday’s annual general meeting.
“The incentive is clearly linked to company performance but details of the deferred portion are sketchy and we do not favour the level of discretion implied in the split of the 30% of profit,” said Active in its voting statement, referring to the policy of allocating 30% of pre-tax profits to employees.
Active is also voting against the re-election of chairman Shams Pather to the board and the re-appointment of Alexandra Watson to the audit and risk committee.
Active, which was recently established by a group of non-governmental organisations to actively manage the voting of their share portfolio, is also voting against the provision of inter-company financial assistance and share buy-backs.Active was established last year to focus on social and governance policies at JSE-listed companies. Its spokesperson and director Bishop Jo Seoka says they were motivated by concerns about the inability of powerful fund managers to exercise effective oversight of powerful boards. “Ordinary shareholders have tremendous rights and responsibilities when it comes to the oversight of the boards of listed companies but they’ve left it to fund managers. Increasingly it’s becoming evident that’s not an optimal situation,” said Seoka
He said for ordinary pensioners, workers and savers, whose money is behind these powerful fund managers, the complexity involved in exercising their rights as shareholders is daunting and inevitably means they abdicate them.
“We felt it was time to make the effort to get involved and were encouraged by other activist initiatives,” said Seoka. He said there was a danger that fund managers were too close to the key decision makers in the companies in which they were invested. “There’s a small community of decision makers, which means considerable potential for echo chambers. We fear that might affect their ability to be vigorously independent when they exercise their oversight role.” said the bishop.
Active chair Sahra Ryklief said they were hoping to encourage more NGOs to join Active.
At Tuesday’s Coronation AGM, Active will vote against the re-election of non-executive chairman Pather to the board and also against the re-appointment of lead independent director Alexandra Watson to the audit and risk committee. It is also voting against Hugo Nelson’s appointment to the audit and risk committee. Independence is an issue in each case.
Chairman Pather has been on the board for 12 years. Watson has served on the board for more than nine years and in addition to chairing the audit and risk committee has been appointed as the lead independent director. Active says that in the absence of additional information they are voting against her re-appointment to the committee.Nelson is being voted against because he is the former CEO of Coronation and there is no mention of the necessary cooling-off period.
The provision of inter-company financial assistance and financial assistance for inter-company share acquisitions are also being voted against because the resolutions are too broad and open-ended. Active is voting against the share repurchase resolution because it is generally opposed to repurchases and believes this resolution is too general.
Shareholder activist Theo Botha has also given notice of his intention to vote against many of the same resolutions. In Proxy View Botha expresses concern about the independence of some of the directors up for re-election. On the remuneration resolution he says the key performance indicators for short-term incentives “are vague and generalised and no details are provided of how the executives’ incentives are arrived at”. Proxy View also does not support share buy-backs.
Seoka says he hopes companies and fund managers pay heed to the growing public concern about the corporate sector.