Share buy-back resolution not universally welcomed by Sibanye-Stillwater shareholders

ABOUT 18% of Sibanye-Stillwater shareholders that voted at the firm’s annual general meeting (AGM) today were against a special resolution to repurchase the company’s shares, seemingly throwing their weight behind cash dividends.

“It was not so much about the buy-back but the quantum involved,” said Sibanye-Stillwater spokesman James Wellsted. The special resolution was for a buy-back of up to a maximum of 20% of Sibanye-Stillwater’s shares.

“That’s quite a big number” given that the gold and platinum group metals (PGM) producer has nearly doubled its share price on the Johannesburg Stock Exchange in the last 12 months, said Wellsted. The firm is currently capitalised at R182bn.

A special resolution requires 75% of support from voting shareholders.

There is a debate among investors regarding the value of share buy-backs with one school of thought believing that shares are only bought back at, or near, the top of the market which is why companies have excess cash to deploy.

Earlier this month, Sibanye-Stillwater CEO, Neal Froneman, promised “future windfalls” as a result of record PGM prices after the firm’s mines generated R15.3bn in first quarter earnings before interest, tax, depreciation and amortisation.

Sibanye-Stillwater declared a final dividend of R9.4bn, equal to 321 South African cents a share, for its 2020 financial year in which it posted a record full-year attributable profit of R29.3bn. As of December 31, the company was R3.21bn net cash.

About a fifth of shares cast at the AGM were also against the implementation of the firm’s remuneration report. Wellsted said the firm would engage with shareholders “as it always does” on the matter.

Global proxy advisor Glass Lewis recommended its clients vote against the resolution citing that executives (with remuneration linked to share price performance) benefited from higher remuneration during 2020.

However, this stands in contrast to the fortunes of employees affected by Covid-19, especially last year when the company was shut down for about five weeks, said Wellsted. This shutdown was followed by a phased return of employees to work over the rest of 2020 in line with government-imposed Covid-19 restrictions.

Wellsted said employees were paid full wages and benefits for the initial phase of the lockdown. After that, the company applied for the South African government’s financial assistance known as temporary employee relief, or TERS, for employees unable to immediately return to work due to the Covid-19 lockdown regulations.

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