The chair of Woolworths’ remuneration committee has defended the package paid to the general retailer’s CEO that has been slammed for being too generous in the context of the earnings knock caused by the multibillion-rand impairment of Australian retailer David Jones.
Responding to questions from a shareholder at the group’s annual general meeting on Wednesday, Tom Boardman said that CEO Ian Moir’s guaranteed pay has not been increased for three years and he has not received a bonus in that time.
Over the past three years the group has gone from reporting a profit of R5.4bn in 2017 to a loss of R3.5bn in 2018 and another loss of R1.1bn in 2019.
Boardman acknowledged that “in the last three years the company’s performance has been poor and this is reflected in the share price”.
The share price has dropped from R74.50 in early 2017 to R54 now. Over the past five years Moir has received a cumulative R191m in remuneration according to the company’s annual report.
In addition to a pedestrian operating performance the group’s profit was hit by a R13bn write-off of David Jones, which was purchased in 2014 for R21.5bn.
Board chair Simon Susman told shareholders that the process of finding a successor for Moir “is well advanced”.
Same consultants
In response to a question from Aeon Investment Management about how the remuneration committee controlled the ratcheting effect on remuneration of listed companies using a limited number of remuneration consultants, Boardman said his committee is aware of it and is trying to address it.
Asief Mohamed, chief investment officer at Aeon, the only shareholder to address the annual general meeting, told Business Day after the meeting that companies generally use the same consultants. “This results in executives benefiting from an ever-increasing peer group comparison.”
More than 30% of shareholders voted against the implementation of the remuneration report. Shareholders have been invited to write to the board by December 6 outlining their concerns.
Aeon also questioned the steep increase in fees awarded to the new chair, Hubert Brody, and the new lead independent director, Zarina Bassa.
Boardman said the increases are justified because Brody and Bassa are taking over at a challenging time for the group, and that they are facing additional responsibilities including greater oversight of the Australian business.
The reappointment of EY as auditors was rejected by 28% of shareholders. Susman, who retired as chair at the end of the annual general meeting, said the board regularly assures itself of EY’s independence.
EY has been Woolworths’ auditors for 87 years.
One shareholder told Business Day that despite concerns shareholders voted for the reappointment because of the need for continuity as Woolworths implements complex new international accounting standards.
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