In a highly unusual move, Astral Foods, SA’s biggest poultry producer, blasted shareholders for symbolically rejecting its remuneration report, saying the vote was inexplicable and inconsistent.
At an annual shareholders’ meeting on Thursday, 58% of eligible shareholders voted against the report — which details the pay and perks given to executive directors in the year under review — triggering a JSE rule that would require it to take steps to address their concerns.
Under the rule, publicly traded companies are required to table non-binding votes on pay policy for the top rank, and if 25% or more vote against it, they are forced to approach dissenting shareholders to address their concerns.
The clear sign of disapproval comes a year after shareholders overwhelmingly voted in favour of the 2020 remuneration report, which Astral said was the nucleus of this year’s report that also included a clause that would force directors to return the money in the event of poor company performance.
“The vote against the remuneration implementation report is therefore inexplicable and inconsistent,” Astral said in a statement.
“The approved 2020 remuneration policy, after wide consultation, was refined to produce the 2021 remuneration policy, which amongst others included a clawback clause. The vote against the remuneration policy is truly incomprehensible.”
Astral’s harsh comments over the vote is an extraordinary turn of events as it is shareholders who ordinarily give companies an earful over executive pay that is out of kilter with shareholder returns both in the stock market and operationally.
Shareholders and broader society are increasingly rebelling against companies that reward their top rank even when share prices and profits are falling or wages for rank-and-file are not rising by the same margin.
The vote at Astral annual shareholder meeting also baffled one of its minority shareholders, Opportune Investments.
“Atral's dismay at the low vote for its remuneration resolutions is justified as by SA standards their policies are very good. Firstly, Astrals incentives are closely aligned with shareholder value,” said Chris Logan, founder and chief investment officer of Opportune Investments.
“Secondly, their one incentive bonus scheme is inclusive in that it is available to all employees, and thirdly, the proof of the pudding is in the eating, Astral has consistently and dramatically outperformed their local peers, most notably RCL Foods Rainbow.”
As is the JSE policy, when 25% or more vote against a remuneration report, Astral will approach dissenting shareholders to address their concerns.
Schutte said in November that the group faced a challenging time, including that in the first half of its 2021 financial year, which began in October, it will have to have some tough negotiations with retailers about price increases as Astral tries to mitigate the high feed costs weighing on the traditionally “paper-thin” profit margins of the poultry sector.
Update: February 4 2021
This article has been updated throughout.
andersona@businesslive.co.za
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