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" 'The remuneration committee should take

South African shareholders are flexing new muscles against exorbitant executive salaries, using their first-ever vote at AGMs to send a warning to JSE-listed companies that dish out hefty salaries.

The King III governance code, implemented last year, said companies should put their remuneration policy to shareholders for a "non-binding advisory vote" at their annual meeting to allow people to "express their views on the [policies] and on their implementation".

This week, Barloworld held its AGM, and while shareholders approved most resolutions by votes of more than 98%, more than 20.2% of shareholders voted against its pay policy or abstained from the vote.

While this was a non-binding vote, it came after Barloworld was quizzed on a lack of detail in its remuneration policy - it paid R50.4-million to just six executive directors, including R23.4-million in bonuses.

CEO Clive Thomson got R14.9-million, including a R7.9-million bonus in a year in which Barloworld made R2.3-billion in operating profit.

But the group struggled to explain why Thomson's bonus was double the R4.3-million he got in 2008, when Barloworld made R2.6-billion in profit.

After the AGM, Barloworld's remuneration committee chairman, Steven Pfeiffer, said he had "no idea" why 20% of shareholders voted against the pay policy, but said his company would contact those investors to find out.

Thomson said the vote was "just on 80% and I see that as a reasonable endorsement".

Other remuneration experts saw it differently.

Charl Kocks, CEO of Ratings Afrika, said: "The remuneration committee should take a big vote against them as a sign they are losing the plot, and should take this criticism to heart."

A remuneration expert, who attended Barloworld's AGM, said "ideally, you'd want a company to be getting a vote on this [proposal] of at least 90%".

But Barloworld isn't the first big JSE-listed company to feel the sting of the new remuneration vote.

Two months ago, more than 35% of Sasol's shareholders voted against the petrochemical company's remuneration policy.

Governance consultant PIRC issued a note to shareholders recommending that they oppose Sasol's remuneration policy because a "lack of information" about whether there is a cap on how much directors can earn "does not allow us to determine whether potential awards are excessive".

This week, Sasol admitted that it was disappointed with the 35% "no" vote at its November AGM, but "we were anticipating this feedback based on prior discussions with shareholders".

The company said it met with shareholders afterwards to discuss their concerns, and their comments "will continue to be analysed and carefully considered".

Sasol paid R46-million to four executive directors. This was lower than the R47.7-million it paid to those four directors in 2010, despite the fact that Sasol's bottom line profit climbed 23% to R20.2-billion.

Shareholder activist Theo Botha raised concern at Sasol's AGM about the fact that CEO David Constable was given an R828000 bonus even though he had been there for only one month.

At least Barloworld and Sasol paid bonuses when profit was rising - unlike many other companies.

In December, Cape Town-based restaurant company Spur was stunned when 42.7% of shareholders voted against its remuneration policy, while 32.8% abstained.

Spur's chief financial officer Phillip Matthee said the company was holding a series of meetings with big shareholders next week to find out where it went wrong.

Spur's profit dropped 13.1% for the year to R68-million, yet its five executive directors were paid R13.6-million together, including R1.3-million in performance bonuses.

In two weeks, paper company Sappi will hold its AGM after a bad year in which it made a $232-million net loss, and its share price slumped from R35.65 to R23.85.

Yet CEO Ralph Boëttger was paid $1.95-million this year, including $908619 in bonuses for the previous year when profit did grow, to $66-million from 2009's loss of $177-million.

This week, the UK's business secretary, Vince Cable, proposed new rules on pay, including giving shareholders a binding vote to strike down company pay packages to "address what is a clear market failure".