PIC opposes Shoprite CEO’s R50m pay

Shoprite Holdings’s largest shareholder voted against the South African food retailer’s remuneration policy because the R50.1m pay awarded to CEO Whitey Basson is mostly a fixed payment, rather than a performance-based salary.

The Public Investment Corporation (PIC), which has a 12.6% stake in Shoprite, was among investors who voted against the company’s executive pay at Monday’s annual general meeting in Cape Town. About 29% of shareholder votes were opposed to the policy.

"The PIC’s view is that the structure of the CEO’s remuneration is skewed toward fixed remuneration and that performance conditions for the executive-share plan lack sufficient detail," the company said. It was aware that Basson had not received variable pay over the past five years.

Mr Basson was paid R50.1m in salary and benefits in the year through June, a small increase from the R50m he was paid in the previous 12 month period, according to Shoprite’s annual report. About R49.7m of that was fixed salary. The next-best paid executive was Aubrey Karp, head of the retailer’s furniture unit, who took home R16.5m.

Iain Moir, CEO of Woolworths Holdings, was paid R49.2m in the year ending on June 28, including a performance-related bonus of R20.9m. Supermarket chain Pick n Pay Stores CEO Richard Brasher was paid a total of R18.7m in the 2015 fiscal year.

"The policy is to essentially have a competitive remuneration policy, in most instances linked to performance," Shoprite chairman Christo Wiese said at the annual meeting.

"It’s very difficult for boards of directors or remuneration committees to strike the right balance, the right balance in terms of being competitive, that you don’t lose scarce talent."

Shoprite profit gained 11% in the year through June, while the company raised its dividend by 10%. The retailer said on Monday it had lost market share in July and August as sales growth slowed, causing the shares to decline to a one-year low.

The stock fell 1.6% to R146.47 at the close in Johannesburg on Tuesday, extending the two-day decline to 7.8%. The shares are 13% lower this year, valuing the company at R84bn.

In the 2010 fiscal year, Mr Basson’s total pay was R627.5m after he exercised R594.5m in share options.

The PIC is owned by the government and manages most state-worker pension funds. It is Shoprite’s biggest shareholder.

Bloomberg