Two of the world’s biggest proxy advisors have told Shoprite shareholders to vote against a new incentive plan for chief executive Pieter Engelbrecht. The vote will take place at the retailer’s annual general meeting on 6 November.
Institutional Shareholder Services (ISS) and Glass Lewis & Co questioned why Shoprite keeps adding special awards on top of its normal incentive schemes. Several large North American investors have said they will follow that advice, Moneyweb reported.
ISS said Shoprite had not given a strong enough reason for another large incentive. It raised concerns about “the repeated use of exceptional remuneration arrangements.”
ISS also wants investors to reject this year’s pay implementation report. It said the remuneration committee used a special modifier so that a short-term bonus paid out in full. This happened even though actual performance fell below the target.
The fight comes in the first AGM season since changes to South Africa’s Companies Act. Shareholder votes on pay are now binding, and directors who oversee pay face bigger consequences.
Investors are being asked to approve a once-off long-term incentive for Engelbrecht. This follows an earlier one-time plan, called an executive super stretch incentive. That plan was valued at R36.4 million, while Chief Financial Officer Anton de Bruyn received R14.2 million.
Engelbrecht’s total earned pay rose 35% to R117.8 million in the latest financial year, including the incentive plan.
Funds that plan to vote against the new incentive include the Florida Retirement System’s State Board of Administration and the California Public Employees’ Retirement System. Canada’s British Columbia Investment Management Corp, Christian Brothers Investment Services and the California State Teachers Retirement System also said no.
Funds under the New York City Comptroller, which oversees about $326 billion, will vote against both pay proposals. So will KLP, Norway’s largest pension company, which manages $90 billion. At least four of the investors said they will also vote against the pay report.
These institutions hold only small stakes in Shoprite. Together, though, they oversee almost $2 trillion.
Shoprite declined to comment beyond its published remuneration report and AGM notice.
Billionaire Christo Wiese, who sits on Shoprite’s remuneration committee, defended the award. He said the company had given a good enough reason for it. He said the committee and its advisors had thought about the decision carefully.
“This isn’t something that was just decided in two seconds,” Wiese said. He described the committee’s independent directors and advisors as “extremely good.”
Wiese also compared Engelbrecht with former Shoprite CEO Whitey Basson. He said he had once been willing to “happily pay a billion rand” for every executive like Basson. “If that applied in the case of Whitey Basson, it applies as much to Pieter Engelbrecht,” he said.
Wiese has been on the board for 35 years. He controls about 41% of the voting rights through ordinary shares and a separate class of deferred shares, according to ISS. The Public Investment Corp is the largest shareholder.
Shoprite’s dividend and earnings per share, excluding once-off costs, both rose about 12% in the year to June. Its shares have climbed 26% this year.
At last year’s AGM, 95.61% of ordinary votes supported the pay implementation report. In 2024 it received only 74.3%, below the 75% level that triggers talks with shareholders.
Source: this article is based on reporting by Moneyweb. Image: Moneyweb. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.