A large portion of Sasol shareholders have voted against the group’s remuneration policy and implementation plan, expressing their displeasure over golden handshakes paid to the former joint CEOs who stepped down over the disastrous Lake Charles Chemicals Project.
At the Sasol annual general meeting on Friday, 28% of shareholders voted against the fuel and energy group’s remuneration policy and 56% voted against the implementation report which detailed how former joint CEOs Stephen Cornell and Bongani Nqwababa were cumulatively paid almost R100m, of which R35m was for “mutual separation”.
The exit of the CEOs from Sasol came five months after the full extent of the problems at Lake Charles became known to the market and costs ballooned from $8.9bn to $12.9bn, causing the share price to plummet.
The Covid-19 pandemic and resultant low oil and chemicals prices have forced Sasol to accelerate efforts to deleverage its overstretched balance sheet this year. As part of its asset disposal programme, the group has sold 50% of the base chemicals business at Lake Charles, a deal that was approved by shareholders on Friday.
Sasol chair Sipho Nkosi said though an independent review on what went wrong at Lake Charles — which has not been made public — found no wrongdoing on the part of the joint CEOs, the board decided that the best interests of the company would be served by an expedited separation.
“We still had to respect rights and contractual obligations of the joint CEOs ... in our view [the separation arrangements] were appropriate and in the best interest of the company.”
The remuneration votes are nonbinding and advisory in nature but, in terms of the King code on corporate governance, if they are not passed by more than 75% of the vote, the board must engage shareholders.
A special resolution on the remuneration of nonexecutive directors was narrowly passed with 76% of the vote. Sasol announced on Wednesday that the fees would be slashed by 20% from what was proposed in the notice of the annual general meeting and that a new framework for nonexecutive director fees would be put forward for shareholders to vote on in 2021.
Tracey Davies, executive director of activist organisation Just Share, said the votes reflect deep dissatisfaction. “Most of those directors have been there right throughout the Lake Charles debacle. It is in some sense extraordinary that they keep getting elected.”
She said investors expressed their dissatisfaction through the remuneration votes.
The re-election of directors Colin Beggs and Stephen Westwell passed with a 76% vote.
Davies said the vote against Westwell, as lead independent director, appeared linked to the company’s refusal to table climate-related resolutions.
Ahead of the meeting, Sasol had, for the third consecutive year, declined to table climate-related resolutions proposed by shareholder activists. The group has committed to hold a nonbinding advisory vote on its climate strategy next year.
This, however, failed to stem a number of tough questions from environmental activists over Sasol’s strategy to deal with its greenhouse gas emissions.
CEO Fleetwood Grobler said Sasol was progressing with its plans to decarbonise its operations and would share more details in December.
Nkosi said on Friday: “We get the message. We will make plans to consult our shareholders. This is a moment of great regret and we will invest a lot of focus in restoring your confidence in us and the company.”
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