RCL Foods, which owns Rainbow Chickens and Selati Sugar, left shareholders with a bitter taste in the mouth after the group appeared reticent over questions about its strategy, leadership and remuneration at its annual general meeting on Friday.
Non-executive chair and Remgro CEO, Jannie Durand, who conducted the virtual AGM, refused to answer a question posed by shareholder activist, Albie Cilliers, who asked if CEO Miles Dally was still the right person to lead the company that has been a disappointment for years.
Remgro, a JSE-listed investment holding company, owns 77% of RCL.
In the past 10 years competitor Astral Foods’ share price has risen 900% from R20 to R200, while RCL’s price has fallen 56% from R17 to R7.44. This is despite RCL supplying 100% of chicken sold to fast-food group Chicken Licken, restaurant chain Nandos and fast-food group KFC.
Dally has been CEO of RCL since 2003. Durand said it would be unfair for Dally to have to respond to the question.
Earlier in the presentation, RCL’s remuneration committee head, Peter Mageza, was also taken aback when he was asked why RCL’s remuneration policy was short of details. He said remuneration was “private” and “very personal”.
Fund manager All Weather Capital’s environmental, social and corporate governance (ESG) specialist analyst, Gomolemo Seete, said the AGM was disappointing.
“I believe the quality of corporate governance at RCL Foods is becoming an issue. Company engagements like AGMs are very important and it didn’t seem that the company was open to talk to its shareholders on Friday,” she said.
“RCL didn’t give details about its strategy to turn around its poor performance. It blamed its chicken business but didn’t detail operational targets. I feel that I am in the dark as a shareholder,” she said.
Typed questions
All Weather Capital’s chief investment officer, Shane Watkins, said RCL was the worst-performing food stock on the JSE over almost any period and that its board and its parent company, Remgro, should take shareholders seriously.
The AGM did not allow for attendees to have conversations with the directors but only for attendees to submit typed questions.
“We are dismayed by the manner in which the RCL AGM was conducted. It was a fiasco. In our opinion the meeting did not meet the standards required by the Companies Act, which allows an AGM to be conducted electronically but only provided that all participants are able to communicate concurrently and are able to participate effectively in the meeting,” he said.
Durand said he only became aware during the meeting that shareholders were unable to dial in to ask questions.
Watkins said it was unacceptable that Durand refused to allow a question on why shareholders should have confidence in Dally as the CEO after the company had underperformed dramatically under his leadership.
“The point is that while the chair of a meeting does not have to answer every question, [he] has a legal duty to allow any reasonable question to be asked at an AGM. We are shareholders and were just not allowed to ask our questions properly,” he said.
Remgro’s AGM will be held on November 30.
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