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Capitec’s chief executive Gerrie Fourie formed part of last night’s BizNews Power Hour, outlining the reasoning behind shareholder backlash over the implementation of the remuneration policy, which was voted down by shareholders at the company’s annual general meeting last week. Executive remuneration is always a touchy subject. It becomes extra-touchy when many of the country, including the lion’s share of Capitec’s customer base, are experiencing financial hardships. For most, the issue is that of principle. However, Capitec has been the best performing business in this country over the past 20 years, creating significant value for shareholders since the start of the millennium. The management, for the large part, have been there for the ride. Given their track record, many of Capitec’s executive team would walk into a large global bank, earning much larger salaries abroad. Let’s not sweat the small stuff and rather focus on retaining our top South African executive talent. – Justin Rowe-Roberts
Gerrie Fourie on why shareholders voted against the implementation of the remuneration policy:
I think it’s important to note that it’s not against the remuneration policy but rather against the execution of the remuneration policy. We already engaged with shareholders a few weeks ago and we knew they were unhappy. Not so much unhappy, because the majority fully understand why we did it but from a compliance point of view they have to vote against the resolution. We have set certain targets for our bonuses as well as for our share options, which were done pre-Covid (February 2020). Then Covid happened and we had to adjust our bonuses and share options to take Covid into consideration. Everyone has said you can change your targets going forward but you can’t do it going backwards. So we believe it was the right thing to motivate management, to motivate the staff because it benefitted everyone. The main driver of that was that Capitec did exceptionally well over the year.
On whether the remuneration policy includes a wide variety of staff interests rather than just high-ranking executives:
There were two sections. There was the short-term bonus which includes all staff and then was the long-term bonus which are share options for executive management and divisional executive management. The view we have taken is it was an extraordinary year with Covid. The targets that were set on both of them were not relevant given Covid. Then you need to use your judgement, which the remuneration committee have done. A very big portion of that was the fact that the last six months of the year Capitec’s earnings beat the prior corresponding period by 18%. Capitec did well overall and the remuneration committee thought it was important to motivate all staff in this case.
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