Pick n Pay | Proxy voting recommendation

Pick n Pay Stores Ltd (PIK) receives a corporate governance score of 2.73 out of 5 (FY '18: 2.76) and is rated as ‘adequate'. By comparison, industry peer Shoprite Holdings (SHP) has a corporate governance score of 2.17 out of 5.

We recommend voting against the following resolutions:

Ordinary resolution 1: The election of H Herman as director
Ordinary resoltion 3.2: The appointment of H Herman to the audit committee
Special resolution 1: Directors' fees

In our view, the non-executive director H Herman is non-independent as he has served on the board for 43 years. H Herman is the Lead Independent Director of PIK. Independence remains a concern with overall board structure lacking an outright majority of independent non-executives.

G Ackerman is the Chairman of the PIK board. G Ackerman, and the Ackerman family as a whole, has a significant direct and indirect shareholding in PIK. The Ackerman family have 25% board representation in PIK with an economic interest of c.26% and voting power of c.50%.

The proposed PIK chairman remuneration fee will increase by c.5% to R4.7m in FY '20. The PIK chairman fee remains higher than its direct peers, apart from SHP. We think that the fee is excessive given a JSE comparable company average of c.R2m. PIK propose a c.10% increase in the audit and remuneration chair fees. We question the appropriateness of fee increases in excess of inflation.

In our previous proxy voting recommendation, we highlighted the importance of CFO succession planning. A Jakoet will be retiring in FY '20 as CFO of PIK, once the PIK board finds an appropriate successor.

PIK continues to improve ESG data disclosure in a biannual sustainability report. The next publication date is July 2019.