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Shareholders who own more than 40% of Shoprite have objected to the salaries the retailer plans to pay its bosses.
At the grocery retailer’s annual general meeting (AGM) on Monday, investors who together own a 57% stake in the company voted for Shoprite's executive pay policy, while 43% voted against.
This is drastically down from last year, when 70% supported Shoprite’s remuneration.
According to Shoprite’s 2018 integrated report, CEO Pieter Engelbrecht, who took over from Whitey Basson in 2016, earned a package of R20,3m in the financial year, down from R25.8m in 2017.
It is proposed that he earns up to R33m in the current financial year – if he reaches all his targets.
The low-income retailer has previously faced furious resistance from unions on remuneration, with Cosatu and others pointing out the massive gap between executive pay and what Shoprite workers earn. The average salary of a Shoprite cashier is currently R2 804 a month. It will take that cashier 50 years to earn what Engelbrecht is paid in a month – and that’s excluding his share options.
Shareholders may also have soured on salaries after Shoprite’s recent performance as the company's profitability comes under pressure.
On Monday, the group said sales grew only 0.4% in the three months to end September.
According to JSE rules, Shoprite [JSE:SHP] now has to contact all the shareholders who voted against the remuneration proposal to hear their views. This is the second year in a row – JSE rules require companies to engage with dissenting shareholders if those holding more than 25% of a company’s shares voted against a remuneration proposal.
This shows that the JSE rules put no real pressure on companies to curb their remuneration.
Shareholder activist and director of Proxy View Theo Botha says shareholders objecting to company’s remuneration policies was becoming "more and more of a problem", with increasing numbers of asset managers opposed to high pay packages for executives.
He said the process of company’s engaging with dissenting investors about their non-binding votes on executive pay is flawed and the JSE should create another vehicle for objections, such as a binding vote which shareholders could use to demand another meeting to discuss remuneration.
Investors in other top listed companies have previously demanded that executive pay be performance linked.
Shoprite said on Monday that low internal food inflation in SA supermarkets and currency devaluation in other African countries where it operates hit sales in the quarter ending September, with the group achieving just 0.4% increase in turnover.
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