Old Mutual shareholders reject CEO’s R300m pay plan
· Citizen
A potential R300 million long-term incentive for Old Mutual CEO Jurie Strydom has sparked a shareholder backlash, with investors voting against the insurer’s remuneration implementation report at its annual general meeting (AGM).
The rejection of the executive pay plan means Old Mutual failed to secure the 75% shareholder approval threshold for the resolution, requiring the insurer to engage with dissenting shareholders in line with corporate governance requirements.
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The R300 million was not going to be paid to Strydom as a performance bonus, but as share appreciation rights.
Old Mutual shareholders reject remuneration plan
Old Mutual said the ordinary resolutions to approve the remuneration policy and the remuneration implementation report each received majority shareholder support.
However, neither achieved the 75% shareholder support threshold under the non-binding advisory voting framework in place at the time the Notice of AGM was distributed.
“Ordinary resolution 5.1 (remuneration policy) and ordinary resolution 5.2 (remuneration implementation report) each received support from a majority of shareholders,” said the insurer.
“However, neither achieved the 75% shareholder support threshold applicable under the non-binding advisory voting framework in terms of paragraph 5.7(k) of the JSE listings requirements, with the voting outcomes for these ordinary resolutions at 68.39% and 70.72%, respectively.”
R300m for higher share price
The proposed incentive forms part of Old Mutual’s long-term remuneration framework, which was developed by the board’s remuneration committee to reward executives for delivering sustained shareholder value.
However, because it forms part of the directors’ remuneration policy, shareholders have an advisory vote on it each year. For Strydom to receive the shares worth R300 million, he has to achieve a specified share price from the insurer within a certain period.
The insurer is valued at approximately R59 billion on the Johannesburg Stock Exchange (JSE), while its competitor, Sanlam, is valued at approximately R188 billion. Old Mutual was founded in 1845 and Sanlam in 1918.
Old Mutual’s share price has risen 18% over the past five years, significantly underperforming Sanlam, whose shares gained 50% during the same period.
R300 incentive
Long-term incentives are designed to align executives’ interests with those of shareholders by rewarding sustained improvements in a company’s performance and share price over several years, rather than short-term financial results.
Strydom’s long-term incentive comprises 27.6 million share appreciation rights with a strike price of R10.87, carrying a maximum potential value of R300 million.
To receive the full payout, Old Mutual’s share price must double to R21.74 by 12 May 2030. The shares closed at R13.43 on Friday, leaving them about 38% below the level required for the maximum award.
The vote was not limited to Strydom’s remuneration, but related to the implementation of Old Mutual’s executive remuneration policy, which covers the pay of the group’s executive leadership.