Stock Talk: Fields of gold for CEOs, not so much for miners

How can the local mining industry hope to win any argument with the government or labour when one of its leading players, Gold Fields, thinks nothing of paying its CEO almost 10% of annual profit?

Who are the shareholders who are prepared, year after year, to vote in support of a remuneration policy that generously rewards executives for continuously dismal performances?

At this week's AGM, 81.5% of the votable shares were represented. Only 22.7% of the shares represented voted against the advisory vote on remuneration policy.

Standards of corporate governance in this country are so grim that this was deemed something of a success.

But what are we to make of the other 77% of shareholders? Do they believe that paying bonuses when earnings are declining is a great idea? It is not even as though the vote means much. It is only an "advisory endorsement of the remuneration policy".

This lack of engagement by shareholders reflects the involvement of "investment professionals" who manage trillions of rands on the JSE and decide how to vote. To the extent they are engaged at all they are presumably much more concerned about upsetting Nick Holland and his cronies than the millions of ordinary workers and savers on whose behalf they invest.

What are the chances that provident funds belonging to National Union of Mineworkers members voted in favour of Holland's outrageous pay? Very high.

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Sibanye

Over at Sibanye, where the remuneration committee is also not shy about being generous to its top executives, 27% of shareholders voted against endorsing the company's remuneration policy at this week's AGM. Sibanye is outperforming Gold Fields, but both will struggle to persuade workers to be restrained when it comes to wage demands.

Of course, if Sibanye's Neal Froneman or Gold Fields' Holland lose their jobs, they have a fortune to fall back on. When miners are retrenched, they have little or nothing.

Mondi

Mondi is the latest dual-listed entity to come up against South African investors' concerns over particular types of resolutions. South African shareholders, who account for 44% of the group's total, evidently do not like placing issued shares under the control of directors. Nor do they like giving directors the authority to allot and issue shares for cash. Resolutions relating to these matters recorded negative votes of around 20%. Anglo American faced similar shareholder sentiment at its recent AGM.

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SABMiller

The purchase of London-based Meantime proves SABMiller is nothing if not crafty. And it has been this way long before it picked up the Miller appendage and became the world's second-largest beer company.

Back in 1983, when SAB had a plethora of interests including OK Bazaars, Edgars, Lion Match and a 97% hold on the local beer market, it purchased Rolling Rock. This was a US pale lager that dominated a highly prized niche market in the US. The trendy beer was much enjoyed by consumers who might have gagged if they'd known its ownership profile at the time.

Perhaps some of their smart executives such as Graham Mackay realised even then that things in South Africa would eventually change and when they did, international experience would come in handy.

SAB later sold Rolling Rock to Miller, which then sold it to Anheuser-Busch.

Craft beers and emerging markets look poised to be the star performers for SABMiller for the foreseeable future. Its confidence in South America and Africa is reflected in the breakdown of its capex plans. Africa gets the lion's share with $728-million, followed by Latin America with $424-million.

The latest results were far from exciting and indications are that financial 2016 will be more, or perhaps a little less, of the same. But it will continue to pump out strong cash flows and speculation about a merger is supporting the high rating.

An analyst from a leading investment team cautions against the likelihood of a deal, noting that SABMiller, which operates in 83 countries, has complex joint ventures in about 40. These might have to be sold as part of any transaction.