Why can’t Astral pay chairman the poultry sum of R1.1m?

Business

Why can’t Astral pay chairman the poultry sum of R1.1m?

Chicken producer’s shareholders vote against giving Theuns Eloff his annual remuneration

Marc Hasenfuss

Astral Foods, the “big bird” of the JSE’s poultry sector, finds itself in the awkward and invidious position of not being able to pay its well-regarded nonexecutive chairman.
At a general meeting on Thursday Astral shareholders voted against a resolution to approve the R1.1-million annual remuneration to nonexecutive chairman Theuns Eloff.
The resolution was taken to a general meeting after shareholders voted down the special resolution around Eloff’s remuneration at an AGM in February this year.
Astral directors were not available at the time of going to press. The company’s investment relations company indicated the directors were locked in a strategy session around the nonexecutive chairman’s remuneration. In a SENS statement, the company noted: “Astral now finds itself in a position where it has a chairman who cannot be remunerated. Astral will be seeking advice and will consider options available in this instance.”How the matter is taken forward will be interesting to gauge with corporate lawyers and the JSE not accustomed to such an event. The development is surprising since Astral enjoyed a strong resurgence in profits last year and rewarded shareholders richly with dividends.
Astral recently indicated that its upcoming interim results to end March would show a marked improvement on the corresponding six months to end March 2017.
The company pencilled in a 410% in increase in both earnings and headline earnings – implying a bottom line number of at least 1,800c per share.
Eloff is also viewed as an astute and well-informed director who adds value to Astral and reinforces the company’s no frills operational culture. It is not known which shareholders voted against Eloff’s remuneration – which only received support from 53% of shareholders that voted at the general meeting. Only 20.8 million shares were voted at the general meeting – which is less than half of Astral’s issued shares.
According to Astral’s latest annual report, the biggest shareholder is the Government Employees Pension Fund  with a 13% holding. Times Select understands the fund did not vote against the resolution.Most market watchers were puzzled by developments. One analyst – who asked not to be named – noted that although Eloff’s remuneration was hardly breaking the bank, the company created a position for a lead nonexecutive director – at a cost of R600,000 a year.
“Possibly this is just shareholders pushing back against additional executive costs?”
Anthony Clark, an analyst at Vunani Securities, said the vote against Eloff’s remuneration was an astonishing development. “Voting against paying a chairman who has consistently added value and knowledge to Astral Foods is disturbing.”
Chris Logan, CEO of Opportune Investments and an Astral shareholder, said the vote was an unfair outcome.
“Astral – which has a market capitalisation of R13.8-billion – is one of the few companies on the JSE which does a great job for its shareholders.”
He argued that the all-inclusive amount of R1.1-million for Eloff was hardly excessive.
Logan believed the best way forward was for Astral to take the resolution back to shareholders. “The company needs to engage shareholders and work to push it through on the third attempt.”

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