Investors could soon get Wiese’s claws out of Shoprite
Through deferred shares valued at 1c each, the tycoon controls 32% of the voting rights in Shoprite
Shareholder activism is paying off for investors in Africa’s largest retailer, Shoprite.
Some investors have long called on the retailer to push through governance changes such as bringing in new people onto its board, providing more clarity on its remuneration policy, and having a shareholding structure that doesn’t give some shareholders an advantage over others.
Shoprite CEO Pieter Engelbrecht said at a presentation for the group’s half-year results that it had made progress in addressing the first two issues and that it was in the process of tackling the third, which would possibly lead to the unwinding of the deferred shares controlled by retail tycoon Christo Wiese.
Through these deferred shares, valued at 1c each, Wiese controls 32% of the voting rights in Shoprite.
The existence of these shares are seen as unfair to the holders of ordinary shares – because with a book value of about R350,000 it gives Wiese, who also holds 16% of its ordinary shares, a big say over what resolutions are passed and who got onto the board.
The unwinding of these deferred shares will mark an end of an era. Byzantine shareholding structures which gave company founders, like Wiese’s great rival Raymond Ackerman, control of their companies without holding the majority of the ordinary shares, used to be relatively common.
Not anymore. Shareholders are no longer prepared to put up with shareholding structures that not only diminish their rights but could also be used to push through changes that are not in their interest.