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Brand damage

Nov 27 2009 00:39
Marc Hasenfuss

THE debacle at industrial conglomerate Bidvest around the (gross) overpayment of McCarthy executive Brand Pretorius has really been bothering me.

What would have happened if shareholder activist Theo Botha, in attending the Bidvest AGM, had not raised the issue of the conspicuously inflated package granted to Pretorius?

Would anyone else have noticed - perhaps an institutional shareholder or two?

It's easy to paint Botha as a pedantic nitpicker, an obsessive as regards the instituting of proper corporate governance at public companies.

But it's this kind of meticulous attention to detail that can expose flaws and little cracks in organisations.

I certainly recall Botha's misgivings around the remuneration policy at Super Group - contentions that were made long (I'm talking years) before some of the sharper investment minds realised the transport conglomerate was running a little too rich.

I'm not saying Bidvest is anything but a robust and well fortified corporate, but the oversight in the Pretorius salary package hardly advances the group's reputation.

On the other hand, Botha's persistent niggling takes on a more authoritative tone.

But back to my original question...

I'm fairly sure one of the bean counters at Bidvest would finally have cottoned on to the fact that Pretorius was being overpaid. But would this fact have been made public?

I have no doubt the matter would have been rectified. However, would Bidvest really want to volunteer this kind of information to shareholders other than in the next annual report's numbers?

I can only imagine the embarrassment for Brian Joffe, the founder and chairperson of Bidvest, to watch these events unfolding in public. Brand Pretorius must feel even worse - not for losing a chunk of his package in one fell swoop, but for having to live with the inevitable suspicion that he accepted such a large overpayment.

Perhaps some attention should be focused on Bidvest's mighty remuneration committee, which comprises some experienced businessmen - Doug Band, Ronnie Masson and Joe Pamensky. Did they not spot the cock-up, which was apparently easily picked up by Botha?

Surely someone needs to be held accountable.

Individuals aside, there is also the "reputational" fall-out for Bidvest to consider.

Admitting in a Stock Exchange News (Sens) announcement that an "administrative error" caused a top paid executive to be granted a 35% instead of a 6% increase certainly would raise questions around financial controls at Bidvest. It's sloppy stuff - especially for a sprawling conglomerate like Bidvest where internal controls really need to be tight at all times.

But what was missing in the Sens announcement was any reference to efforts at reversing the payments already made to Pretorius in error.

I hear that Botha was quick to fire off an email to Bidvest to query this very matter, asking for confirmation of whether Pretorius would indeed be required to pay back his "overpaid" portions.

From what I understand, Bidvest financial director David Cleasby confirmed that Pretorius has already made the required repayment - an amount I would estimate at about R800 000.

Perhaps this is something Bidvest should be announcing on Sens as well.

The real deal

I have witnessed two annual general meetings (AGMs) this month where the chairperson has been most efficient in quashing enquiries into the company's affairs by minority shareholders.

Buddy Hawton was brilliantly defiant in refusing to elaborate on or allow certain matters when he chaired the recent Woolworths AGM. But I was even more impressed with former politician Valli Moosa - a real corporate novice - as he fended off barbed enquiries from minority shareholders during the Real Africa Holdings (RAH) AGM this week.

Interestingly, when I left the Sun International executive boardroom - the venue for the RAH AGM - I spied Buddy Hawton (the previous chairperson of RAH and a former chairperson of Sun International) hovering in the corridor, cup of tea in hand.

One can only wonder whether Buddy had been on hand recently to tutor Valli on the finer points of chairmanship? If so, he's done a first class job.

Paladin fixing for Erbacon?

I have one of my regular correspondents, Riaan Grobler, to thank for this one.

Riaan believes Paladin is being very clever in pitching for a 34.9% stake in scaffolding group Top Fix.

The idea would be for Paladin to secure a major stake in Top Fix to create a mutually beneficial arrangement with Erbacon (another of Paladin's infrastructure-aligned investments).

In essence, Riaan reckons Paladin will use its influence in both companies to get Top Fix to supply Erbacon with scaffolding at an attractive rate.

It's recurring business for Topfix and fixed (read: cheaper) costs for Erbacon. I like it, Riaan - I really like it!




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