Coronation told: spell out bonuses

• Lack of transparency on remuneration of executives is particularly inappropriate, shareholder activist Theo Botha tells fund manager

Shareholder activist Theo Botha is insisting that Coronation Fund Managers disclose details about the awarding of R604.5m in bonuses to its employees ahead of its annual general meeting next week.

Shareholder activist Theo Botha is insisting on Coronation Fund Managers disclosing details of the awarding of R604.5m in bonuses to its employees ahead of its annual general meeting next week.

While the bonus — equivalent to 30% of taxed profit — is distributed among all the employees, Botha says a handful of executives get the lion’s share.

He says it is unacceptable that the identity of these key individuals is not disclosed.

Executive directors Anton Pillay and John Snalam are the only two executives whose remuneration is disclosed.

The lack of transparency was particularly inappropriate, given Coronation’s role in monitoring corporate governance adherence at companies in its portfolio, Botha said.

He has again called on shareholders to vote against the remuneration policy.

In 2017, the policy was put to a shareholder vote for the first time, but in terms of the King code it is nonbinding. A little more than 15% of shareholders voted against the policy, with the Public Investment Corporation’s 9.53% accounting for more than half of that vote.

The PIC said it voted against the remuneration policy in 2017 because it was inconsistent with best practice and lacked disclosure of key performance indicators, targets and weightings. But in 2018 the policy includes key performance indicators.

One institutional shareholder said he had voted in favour of the policy because he believed the 30% bonus pool was less than the other major players in the fund-management industry, such as Investec and Stanlib, paid their staff.

“In this industry, staff costs inevitably represent a large and growing percentage of total costs and can whittle away shareholder returns. Coronation seems to have a better handle on this very prickly issue.”

Until the 2017 annual general meeting, Coronation did not put the policy to a vote on the grounds that the bonus payment had been established 23 years ago and represented a contract between the company and its employees. Details of the policy had been included in Coronation’s prelisting statement when it listed in 2003 and had been implicitly approved by shareholders at that stage.

The latest remuneration report, which was signed off on December 29, makes no mention of the collapse of Steinhoff in which Coronation was heavily invested. The collapse in the share price, which cost Coronation R9bn, occurred after its September year-end.

It is unclear if there is any provision for clawing back previous bonus payments.

In early January Coronation’s chief investment officer, Karl Leinberger, acknowledged in a letter to stakeholders that Coronation got it wrong, saying: “The failure of the board and the company’s independent auditors to identify what is at least two years of misstated financial statements is frustrating.”