“It’s not a cool place to find ourselves,” was Spar Group executive chair Mike Bosman’s rather understated response to the odd decision by shareholders to vote against directors’ fees at the annual general meeting.
Unless the decision is reversed at an extraordinary general meeting of shareholders, which has yet to be called, it means that Spar’s directors will not receive payment for any work done between March 1 2023 and February 29 2024.
This is not a good position for any company to be in; it is a particularly bad position for a company that is battling to recover from a slew of allegations relating to corporate governance and needs all its directors to be enthusiastically onside.
It also hardly seems fair. By all accounts Bosman and his co-directors have been working flat out over the past two months to address the allegations, which knocked the share price to a low of R113 in late-December. “The share price has recovered to R145, so I think the market appreciates what we’ve been doing,” Bosman told the FM soon after the AGM. The shareholders, not so much, it seems.
The special resolution needed to approve payment of fees to directors was blocked by 28% of those at the AGM. Bosman won’t say who was behind the vote, but it appears to have been led by the Public Investment Corp (PIC), which, with more than 22%, is Spar’s single largest shareholder. The PIC did not immediately respond to the FM’s request for comment.
Bosman, who was appointed executive chair from February 1, is understandably perplexed, given that all the ordinary resolutions reappointing the directors were passed with 80%-plus support.
Essentially the shareholders have said: ‘We’re going to vote for you, but we’re not going to pay you.’ It’s very, very unusual
— Mike Bosman
“Essentially the shareholders have said: ‘We’re going to vote for you, but we’re not going to pay you.’ It’s very, very unusual,” he says.
Not that Bosman hasn’t previously come across some very unusual voting behaviour. At last year’s AVI AGM, shareholders blocked an unprecedented seven special resolutions, many of which related to the remuneration of executive and nonexecutive directors. But because shareholders at that AGM were voting only on increases in remuneration and fees, the company was able to pay the same fees as it had the previous year. Bosman stepped down from that board at the end of January.
While the new executive chair of Spar has been commended for progress in addressing the many challenges facing the group, few shareholders at the AGM were encouraged by his first public outing.
“For a company that’s been in the media so much for all the wrong reasons, he gave away a great opportunity to engage with stakeholders,” Just Share’s Greer Blizzard told the FM after the meeting.
Blizzard had hoped Bosman would kick off with an account of his first 60 days and the various issues he’d faced and how he was dealing with them. “Instead, he just launched into the resolutions and seemed to want to gallop through them,” says Blizzard, who says she left the meeting with more questions than she’d had at the start.
ESG Insight’s Mehluli Ncube is similarly disappointed by the AGM’s failure to shed some light on why the two most senior individuals in the group (former chair Graham O’Connor and former CEO Brett Botten) had so abruptly quit. “From the information in various Sens announcements, it’s difficult to understand why they’ve had such an extensive overhaul of the board,” Ncube tells the FM.
Ncube was particularly peeved at the board’s refusal to allow verbal questions during the AGM. “It’s difficult not to suspect they wanted to avoid any tough probing.”
Opportune Investments CEO Chris Logan, a long-term Spar shareholder, was also irked at not being able to ask questions. “It was a bit shoddy that there was no verbal facility and it did all feel a bit rushed,” Logan tells the FM. But he enthusiastically endorses Bosman’s appointment and calls the renewed board a considerable improvement on the previous “clubby Durban” board. “He’s been doing a great job dealing with fires that are all over the place and he’s come in with energy,” says Logan.
Next month Bosman is heading off to take a closer look at one of the bigger of those fires, the Polish operation, which has notched up R1.5bn of operating losses in the last three years. Bosman says they will pull out if necessary but adds that he is very bullish about the country. “Everything you read about Poland is encouraging and it’s a relatively low-cost producer.”
And then it’s onto Ireland, where he might try persuade the banks to cut the group some slack.
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