Irked shareholders vote against Rebosis’ pay policy
Property fund's remuneration policy is slammed in advisory vote as it battles with R9.5bn debt
In an unprecedented move in the listed real estate sector, 80% of Rebosis Property Fund’s ordinary shareholders voted against implementing the company’s remuneration policy.
This is a strong indication that investors have run out of patience with the ailing real estate investment trust, founded by CEO Sisa Ngebulana, and which failed to pay a dividendin 2019.
The company has been through a turbulent two years in which it wrote off its investment in UK mall owner New Frontier Properties, having lost more than R2bn of its value, and has had to sell offices and malls in SA to handle its escalating debt levels.
The share prices of its A and B shares have each fallen more than 90% in the past two years.
Its debt was last disclosed at R9.5bn in November 2019, while its loan-to-value was 64.5%, the highest in the real estate sector.
Rebosis has a dual share A and B structure, which is designed to serve investors of varying risk appetites.
A-linked shareholders are paid first and are first in the queue should the company be wound up. Their dividend growth is capped at 5%. B-linked shareholders are paid whatever is left over and there is no limit on the potential growth of their dividends.
Its B-shares serve as its ordinary shares.
Evan Robins, a portfolio manager at Old Mutual Investment Group, said it was not uncommon for investors to vote against remuneration policies, but Rebosis had broken a record in terms of the sheer majority that was against the policy itself and its implementation.
As much as 80% of eligible B-share ordinary shareholders voted against the remuneration implementation report.
More than 73% of A ordinary shareholders voted against the implementation report. An overwhelming 94.99% of A ordinary shareholders voted against the remuneration policy itself.
The votes are advisory in nature. Robert Lewenson, the head of environmental, social and governance at Old Mutual Investment Group, said this meant that while it may be in Rebosis’ board’s interests to scrap the remuneration policy, shareholders could not force its hand.
"We’ve for long time been advocates of ‘say on pay’ in SA. While King IV [the report on corporate governance] prescribes forced engagement from a board with its shareholders if the company gets a large vote against its remuneration policy and report, shareholders still don’t have enough power to force the board to reconsider its remuneration policies," he said.
A spokesperson for Rebosis said on Monday that the company would hold discussions with its shareholders about their concerns around remuneration.
"Shareholders did not support the resolution as they require more detail on key performance areas. It should be noted that shareholders did not object to the actual remuneration, as the directors’ emoluments were passed, but rather to the policy due to the lack of detail," he said.
"We are engaging with shareholders on the matter, which is a standard process in instances where resolutions are not passed," the spokesperson said.
Fund managers have said that Rebosis needs to disclose targets and benchmarks, especially for short-term incentives. The remuneration of Ngebulana has been erratic, largely reflecting his changes his role at the company since 2016.
Meanwhile, Rebosis’ board has said it is making progress in its bid to merge with Delta Property Fund and if a circular about how a tie-up would proceed was not released in the next five weeks, the two companies would scrap the plan.
• Republishes to correct the following error in the February 4th article:
The remuneration of Ngebulana has been erratic. We didn’t explain that Mr Ngebulana’s salary was erratic largely because his position changed from CEO to deputy chairman.