Delisting ‘no’ at Coronation
Shareholders make board jump through hoops but going private would be too costly, say bosses
Delisting Coronation Fund Managers would save the board from jumping through a lot of hoops at the annual general meeting but it would require a lot of money, the group’s chairman said on Tuesday.
At the end of a sometimes tense two-hour meeting, shareholder Johannes van der Horst asked Coronation Fund Managers chairman Shams Pather: "Does it really make sense to be listed and jump through all these hoops?"
Pather indicated that a media presence limited the scope for discussion. "It’s a strategic issue … it’s a good point … it would need a lot of money."
During the preceding two hours the board had been grilled by a number of shareholders who were concerned primarily about the poor disclosure of the details of the fund manager’s controversial remuneration policy. In terms of a contractual arrangement between the company and its 290 employees, 30% of Coronation’s annual pretax profit is allocated to a bonus pool. But the fund manager provides no information of the basis on which bonuses are then allocated to individual executives.
Shareholder activist Theo Botha chastised the company for its poor level of disclosure and said the trust that managed the bonus pool could not be deemed independent of the company and therefore details of how it operated should be disclosed.
Asief Mohamed of Aeon Investment Management urged the company to disclose the pay of the five highest-paid individuals. "I realise that in terms of the Companies Act and the King code, you’re not obliged to make this disclosure, but
as a signatory to the UNPRI [principles for responsible investment] and given the South African context, it is important for this disclosure to be made," said Mohamed.
He also asked that the board consider disclosing the remuneration gap between the top and bottom 10% of employees.
But Pather said the board would not disclose what it paid the top five. "It goes to our competitiveness, so we do not want to publish that," said Pather.
Botha said that given the dismal level of disclosure around remuneration, it was impossible for any shareholder to make an informed vote on policy. Despite this, the policy received 84.6% of the nonbinding vote.
The Public Investment Corporation (PIC), which holds just more than 12% of Coronation, is thought to have voted against the policy. The PIC is also thought to have voted against a new memorandum of incorporation, raising concern about a reduction in shareholder rights relating to the nomination of directors and access to financial records.
However, Coronation CEO Anton Pillay said the changes represented no reduction of shareholder rights and were merely administrative.
The 2016 annual report is the first report in which Coronation Fund Managers has disclosed any details about its remuneration policy.