Dis-Chem Pharmacies | Proxy voting recommendation *updated
We published a DCP proxy voting and governance report on 22 July 2019 but became aware of further information regarding related parties. This has led to the following changes:> We reduce DCP's corporate governance score to 2.71 out of 5 and rate them 'adequate' (previously 3.27 out of 5 and a 'good' rating).
> We increase DCP's ESG score to 2.6 out of 5, the corresponding Beta adjustment is now 5.6% (previously 2.4 out of 5 and a 4.1% Beta adjustment).
> We include a table of related parties, DCP's relation to them and further commentary in the report.
Furthermore, we adapt our recommendations to suggest voting against the following resolutions:
> Ordinary resolution 3: We believe that L Nestadt is not independent, given his indirect interest of 1.5m shares. L Nestadt is also post retirement age (68). DCP requires a chairperson that will be able to challenge management given managements c.54% interest in the DCP group.
> Ordinary resolution 9.1: We believe that DCP's long term incentive scheme lacks challenging targets. We commend executive management for proposing ROCE targets in the remuneration policy for FY '20.
> Special resolution 1: Although non-executive directors receive JSE comparable remuneration and inflation-related increases in FY '20, the chairman of the board will be paid close to c.R3m which we view as excessive. DCP's CEO base remuneration is also excessive when compared to JSE peers.
Dis-Chem Pharmacies Limited, formerly Dis-Chem Pharmacies Proprietary Limited, is a pharmacy company in South Africa. In addition to pharmaceutical products and services, its retail pharmacies also sell personal care and beauty, healthcare and nutrition and baby care products, as well as confectionary, dry grocery, household and other ancillary products. It offers dispensary products, including diagnostics, first aid, and mobility and incontinence; beauty products, including beauty accessories, color cosmetics, face care, fragrance and skin care; toiletries products, including bath care, body care, foot care, hair care, oral care and shaving; electrical products, including heating and cooling, household and lifestyle, and household products, including cleaners and fresheners, insecticides, kitchen tools, purifiers and veterinary. It also offers vitamin products, sports supplements, and sports equipment and aids, and foods and specialized diet. It has over 101 stores in South Africa.
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