Theuns Eloff. Picture: SUPPLIED
Theuns Eloff. Picture: SUPPLIED

Astral Foods, the "big bird" of the JSE’s poultry sector, finds itself in the awkward position of not being able to pay its well-regarded nonexecutive chairman, Theuns Eloff.

At a general meeting on Thursday, Astral shareholders voted against a resolution to approve the R1.1m annual remuneration to Eloff.

The resolution was taken after shareholders voted down a special resolution on Eloff’s remuneration at its annual general meeting in February.

Astral directors were not available for comment at the time of going to press.

The company’s investment relations firm said directors were locked in a strategy session on Eloff’s remuneration.

In a Sens statement, Astral said: "Astral now finds itself in a position where it has a chairman who cannot be remunerated. Astral will be seeking advice and will consider options available in this instance."

How the matter is taken forward will be interesting to gauge, with corporate lawyers and the JSE not accustomed to such an event. The development is surprising as Astral had a strong resurgence in profit in 2017 and rewarded shareholders richly with dividends.

Astral recently indicated that its interim results to the end of March would show a marked improvement on the corresponding six months to end-March 2017. The company pencilled in a 410% increase in earnings and headline earnings — implying a bottom line number of at least 1,800c per share.

Eloff is viewed as an astute and well-informed director who adds value to Astral and reinforces the company’s no-frills operational culture.

'Shareholders push back'

It is not known which shareholders voted against Eloff’s remuneration, which received support from only 53% of shareholders who voted at the meeting. Only 20.8-million shares were voted at the meeting, which is less than half of Astral’s issued shares.

According to Astral’s latest annual report, the biggest shareholder is the Government Employees Pension Fund (GEPF), with a 13% holding.

Business Day understands the GEPF did not vote against the resolution. Most market watchers said they were puzzled by developments.

One analyst, who asked not to be named, said although Eloff’s remuneration was hardly breaking the bank, the company had created a position for a lead nonexecutive director — at a cost of R600,000 a year.

"Possibly this is just shareholders pushing back against additional executive costs."

Anthony Clark, a Vunani Securities analyst, said the vote against the remuneration was an astonishing development.

"Voting against paying a chairman who has consistently added value and knowledge to Astral Foods is disturbing."

Chris Logan, CEO of Opportune Investments and an Astral shareholder, said the vote was unfair. "Astral, which has a market capitalisation of R13.8bn, is one of the few companies on the JSE which does a great job for its shareholders." He said the all-inclusive amount of R1.1m for Eloff was hardly excessive.

Logan said the best way forward was for Astral to take the resolution back to shareholders. "The company needs to engage shareholders and work to push it through on the third attempt."