Tiger Brands | ESG | Pressed to execute

TBS receives a corporate governance score of 3.37 out of 5 (FY '18: 3.42) and is rated as ‘good'. TBS receives an ESG risk score of 2.6 (FY '18: 2.6) which we consider moderate.
As in FY '18, there were various changes to the Board which raises corporate governance concerns surrounding succession planning and the execution of strategies. Post year-end, L Mac Dougall retired as CEO of the Group. N Doyle has become the new CEO of the Group as of 1 Feb '20. We note the corporate governance concerns around the appointment of N Doyle given that he left the Group at an important juncture in FY '09 as CFO. TBS has appointed an acting CFO, P Padayachee, and states that a permanent replacement for N Doyle will be made within the next six months. We note that the Board has appointed four non-executive directors, with one resigning, in FY '19. Subsequently in FY '20, M Fandiso has resigned as a non-executive director. The Board is refreshed and right-sized (12 members).
We commend the Group's introduction of malus and clawback clauses on variable pay and the requirement for a minimum Group shareholding by executives. The remuneration policy has been suitably revised. LTI's are still based on two metrics being HEPS growth and ROIC with equal waiting. We recommend that TSR be a performance metric determining incentives going forward. Positively, we note the Group will no longer issue cash-settled share appreciation rights and bonus matching shares. We recommend that the Board reconsider non-resident directors as their fees are at a 130% premium to resident directors.
The Group's proxy is subject to change post FY '20 Board changes. We recommend voting for all resolutions except special resolution 6 (the approval of non-resident directors' fees).