How a Spur director made history with big ‘no’
Spur’s recently appointed nonexecutive director Tasneem Karriem has made JSE history by scoring an unprecedented 41.3% "no" vote against her appointment as a director at the group’s annual general meeting on Friday.
Karriem was nominated to the board by Grand Parade Investments (GPI) earlier in 2017 in terms of an empowerment transaction concluded between Spur and GPI in October 2014. Her nomination comes after Alan Keet resigned from the Spur board after earlier resigning from GPI in April.
At Friday’s meeting, shareholders were asked to confirm Karriem’s appointment. Only 58.7% of those attending voted in favour. As it was an ordinary resolution requiring only 50% backing, this was sufficient to secure her appointment.
Karriem, CEO of GPI, is a qualified chartered accountant and was in senior management with EY’s transaction services team. She joined GPI in July 2015 to head its corporate finance activities and was appointed to the board in September 2016. Vunani Securities’s Anthony Clark, who attended the meeting, said the vote against Karriem might have reflected shareholder concerns about GPI’s involvement with Spur.
"GPI has built up a 17.9% stake in Spur but nobody is very sure what their underlying intention is," said Clark.
He said that initially Spur shareholders thought the tie-up would be good for the company and believed there were synergies, but nothing came of it.
Adding to the concerns was the fact that GPI had a competing investment in the form of Burger King. "Perhaps shareholders didn’t think it was appropriate to have the CEO of a competitor on the board," suggested Clark.
Karriem’s resolution was not the only record-breaking vote at the annual meeting. A total of 51% of shareholders voted against endorsing the group’s remuneration policy.
Because this is a nonbinding resolution, the historically low level of support carries no legal implications. However, in terms of the King IV code the board is obliged to engage with the shareholders to discuss their concerns about remuneration. At the 2016 meeting, 27.6% of shareholders voted against the remuneration policy.
Shareholders of companies such as Woolworths and Discovery have also recently raised concerns about the remuneration of directors.
Spur had a tough financial 2017, reporting a hefty 26% slump in diluted headline earnings. The impact of weak economic conditions was aggravated by a consumer boycott, fuelled by social media, after a racial incident at a Joburg outlet.
The group also had to contend with aggressive discounting by competitors in an over-traded market.
CEO Pierre van Tonder told the meeting that Spur had "regrouped" and was tracking about 7% ahead of budget up to November.
Clark said: "I’m feeling fairly positive they’ll issue a trading update revealing a mid to high single-digit increase for the first half; in this market that’s not bad." He believes Spur is holding up considerably better than many of its franchise competitors and was comforted by the explanation for the unexpected departure of former chief financial officer Ronel van Dijk.
Spur’s share price closed 0.15% firmer at R26.55 on the JSE on Monday.