Nampak: Shareholders give bosses a lucky break, for now

Shareholders of the rapidly shrinking packaging company Nampak appear to be happy with management. They voted overwhelmingly in support of all but one resolution at this week’s annual general meeting. Even the non-binding advisory votes on remuneration scored a relatively high level of backing with just 16% voting against the policy and 14% against its implementation.
This seems exceptionally accommodating given that the company’s market cap is about a fifth of what it was a few years ago. The executive team is apparently being rewarded in the hope it will save shareholders from continued pain.
And then there’s the non-executive chairman who gets an annual fee of R1.9m, which looks extremely generous for a company with a market cap of only R9bn. It seems shareholders were persuaded the chairman would be playing something of a hands-on role as the struggling company attempts to implement a more focused strategy.
Such focus will likely see more disposals of underperforming operations such as the glass division, which has so far attracted no buyers despite the large “for sale” sign.
The only indication that shareholders were paying attention was the blocking of special resolution number two, which scored a hefty 37% “no” vote. The board was hoping to get sufficient support to change the company’s memorandum of incorporation so that nonexecutive directors only had to retire after nine years. The JSE standard is to retire a third of the directors each year, which usually means each director has to be re-elected every three years.
It’s difficult to know why the board attempted to make this change unless it felt it had such a compliant body of shareholders they could get away with anything.
Nampak’s explanation that shareholders could always put forward a resolution to vote off a director if they were unhappy with his performance ignores the difficulties of actually doing this.