Gemfields left hanging on the telephone after dissenting shareholders perform no-show

London Calling

OBJECTIONS to remuneration pay is obviously a governance issue that companies have to take seriously. However, there are instances when shareholders can push the patience of even the most observant of company officer.

Take Gemfields, a Johannesburg-listed company that has twice suffered significant votes against its remuneration policies, once when it was Pallinghurst Resources, the investment company that owned the Gemfields business.

Commenting on the company’s year-end results last week, Gemfields chairman Brian Gilbertson expressed exasperation after convening a conference call to discuss the concerns about executive pay. It seems as it some shareholders – 29.6% of whom voted against Gemfields’ last remuneration report – prefer to be counted rather than heard.

Said Gilbertson: “In August 2018, the company hosted a telephone conference inviting views on the company’s remuneration policy. The turnout at this meeting was disappointing with only one shareholder – who had in fact voted in favour of the policy – dialling in”.

“Gemfields has therefore furthered efforts to seek shareholder feedback on an individual basis,” he concluded.

Lonmin promised last week that it would undertake a “… holistic review of pay arrangements” in the event the takeover by Sibanye-Stillwater did not proceed. This was after nearly 74% of Lonmin’s shareholders voted against the 2018 remuneration report at the firm’s annual general meeting (AMG) on March 25.

In that scenario, executive pay will be restructured to “… ensure alignment with the group’s evolving strategic priorities”. It also promised to meet with shareholders on how this might be done.

3 COMMENTS

  1. Really Dave this is just shocking journalism. The people who voted against the excessive remuneration won in the end of the day. Read the 2017 AFS released in mid 2018 to see what happened. Plus Mr. Frandsen, Mr Thapliyal & Mr Willis all resigned taking away a significant chunk of unnecessary costs.
    For your reference the key part of the report is given below. The reason why there was no one on the line was because management backed down and addressed the shareholders concerns, shareholders won….. you should feel embarrassed….
    “KEY DECISIONS MADE IN 2017
    Changes to Executive Director base compensation
    Shareholders approved the proposal at the Company’s General
    Meeting on 26 June 2017 that each Executive Director’s base
    compensation be set at US$600,000 per annum. However,
    following consultation with shareholders during the year,
    certain reductions in base compensation were proposed by
    certain Executive Directors and agreed to by the Remuneration
    Committee and Board.
    Sean Gilbertson elected to reduce his base compensation
    by approximately 22.5% from US$600,000 to GBP350,000 per
    annum (equivalent to US$464,746, converted at the average
    US$/GBP exchange rate for the period of his employment
    during 2017). Sean Gilbertson is the Chief Executive of Gemfields
    and his new base compensation has been benchmarked
    against that of the former Gemfields CEO, with a reduction
    reflecting Gemfields’ withdrawal from the AIM stock exchange.
    Mr Willis elected to reduce his base compensation by approximately 42.5% from US$600,000 to GBP260,000 per annum
    (equivalent to US$345,240, converted at the average US$/GBP
    exchange rate for the period of his employment during 2017).
    This figure represents the midpoint between the amounts
    received by the former Gemfields COO and CFO.
    Mr Frandsen’s base compensation remains unchanged at
    US$600,000 per annum. This is equivalent to the former
    Gemfields CEO’s salary, but without the same reduction as
    Sean Gilbertson in the light of Mr Frandsen’s additional duties
    as Chief Executive of the Company and his responsibilities at
    Sedibelo Platinum Mines Limited.
    The affected Executive Directors have elected to backdate their
    reductions to 15 September 2017, the date from which their
    base compensation payments commenced.
    Any annual bonuses for Executive Directors will be calculated
    entirely on these lower base compensation amounts, for 2017
    and beyond.”

    • Hi Investec

      Firstly, thanks for pointing this out.
      Second, however: I will ask Sean Gilbertson why the call was convened if the matter was dealt with as described. I’m just curious about that.

      Sorry you feel let down by the journalism.

      Regards

      David

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