Truworths commits to transformation of its board
Following complaints by activists, clothing retailer says women and blacks will have 30% representation in the near term
Clothing retailer Truworths, which has been targeted by activist shareholders because of the dominance of long-standing white males on its board and executive management team, says it is fully committed to transformation and is on track to reach its board-level BEE targets within 18 months.
Earlier this week activists slammed the board and executive management team of Truworths, which has only two black women on its 11-member board, for being completely detached from the demographic of its core customers. Bishop Jo Seoka, chairman of Active Shareholder, which advises nongovernmental organisations how to vote their shares, described the board as the “quintessential old boys’ club”.
Group chairman Hilton Saven told shareholders ahead of Wednesday’s annual general meeting that Truworths had a “solid policy in terms of transformation” and women and blacks would have 30% board representation “in the near term”. In the mining sector 50% of directors must be black, of which 20% must be black women.
The retail sector, which does not rely on government for licences or business, has managed to side-step the broad-based BEE codes of good practice. “The codes are voluntary and only really take effect if you fall within the government’s orbit,” said one BEE analyst, who cannot be quoted in the media. He said this was also why none of the retailers had implemented a BEE share scheme.
Shane Watkins, chief investment officer of All Weather Capital, told shareholders at the meeting he was concerned by the lack of multi-generational experience on the board and by the lack of transformation.
Seoka said it was possible the relatively strong presence of international fund managers among shareholders in the retail sector contributed to the lack of transformation. UK-based Standard Life Aberdeen is the largest single shareholder in Truworths with a 14.4% stake, while 61% of the retailer's shareholders are non-South African.
“Unfortunately my experience with international investors is that they don’t really care about these sort of issues; all they’re interested in is a company that makes money at any cost,” said Seoka.
International fund managers account for 61% of shareholders at Mr Price; 53% at TFG,48% at Woolworths and 72% at Clicks, according to financial data firm FactSet Research Systems.
The Public Investment Corporation (PIC), which manages about R2-trillion of mostly South African government employees’ pensions, is the second largest shareholder in Truworths with a 12.3% stake. The PIC was unable to confirm how it voted at Wednesday’s meeting but it appears to have voted in favour of the re-election of former Truworths executive Tony Taylor (71), and the appointment of Hans Hawinkels (66). These are the two directors Active Shareholder said it opposed on transformation grounds. Taylor received 96% backing and Hawinkels 99%.
Truworths said in a statement following the meeting that the board is “very mindful of the need to refresh board and committee composition”.
Just under 25% of shareholders voted against Truworths’ remuneration policy; 22% voted against Rob Dow’s reappointment to the audit committee and 20% against Michael Thompson’s reappointment to the same committee.