A whopping 65.36% of embattled IT group EOH’s shareholders have shot down the company’s remuneration policy. At the company’s annual general meeting held on Friday morning, the same number of shareholders also voted against the remuneration implementation report.
Although shareholders’ vote on remuneration matters is not binding to companies in South Africa, EOH is compelled to engage the dissenting shareholders according to the JSE regulations if more than 25% of those present opposed it.
In a statement published after the AGM, EOH invited shareholders who had not yet engaged with it regarding their concerns to get in touch with the chairperson of its nomination and remuneration Committee, Ismail Mamoojee.
"EOH will consider all concerns and take steps to address legitimate and reasonable objections and concerns," said the company.
The shareholders’ dissenting vote on EOH’s executive pay comes as the company is still trying to clean its image and win back investors’ confidence, following revelations that it was involved in corrupt tenders. As more allegations emerged, shareholders lost billions of rands as the company’s share price plummeted from a high of R171 in December 2016 to just R12.55 by Friday at midday. An investigation by ENSAfrica uncovered some R1.2bn of "suspicious transactions", primarily in the public sector.
Current CEO Stephen van Coller, who was appointed in September last year, has tried to restore confidence by playing open cards - including releasing the results of ENSAfrica’s report - and shareholders voted overwhelmingly in favour of his other proposed special resolutions, including buying back the company’s shares and the disposal of some of its businesses.
Avior Capital Markets analyst, Ruhan du Plessis, said this showed shareholders were satisfied with the direction in which Van Coller was taking the organisation, but maybe there were specific reasons they were not happy with the remuneration proposals.
"He’s been very open about his strategy. He’s gone around asking shareholders what they would like to see happen, and the fact that they voted for that shows they are in line with what management is doing," said Du Plessis.
EOH’s share price fell 2.6% after the AGM, reaching an intraday low of R12.38. But it was still 37% higher than the R9 multi-year low of R9, reached earlier in 2019.