EDITORIAL: ARC tone-deaf to plight of its shareholders
This kind of thing doesn’t help SA’s capitalist apparatus, already under fire from many in the ruling party, demonstrate that it’s not the extractive system gamed to reward the powerful that its critics claim it is
To Albie Cilliers, one of SA’s handful of shareholder activists, the executives who charge immense "management fees" even as their shareholders take a beating are akin to "the politicians sitting at home during Covid-19, getting paid full salaries while the rest of SA Inc bleeds".Cilliers was talking, in particular, of African Rainbow Capital (ARC), owned by Patrice Motsepe, which walked into a storm this week for its plan to shovel large chunks of cash at its executives, even though the share price has slid 67% since it listed on the JSE in 2017.It has become a corporate cliche for CEOs to talk self-righteously about how their "interests are aligned with shareholders" — the ARC example illustrates that often this is just glib lip service.So how did this happen?ARC has a complicated structure: investors buy into the fund, which is "managed" by the executives who earn an immense fee for doing so — equal to 1.75% of the fund’s net asset value (NAV).It’s a structure that has produced a...
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