Spar AGM Pushback Sends Clear Message To Corporate SA: Get Executive Pay Right

Spar became the latest JSE-listed company whose shareholders objected against the group’s executive pay policy and the way it was implemented. A substantial 61% voted against how executives were paid at the 2025 AGM.

Shareholders and proxy advisers typically regard payments that can’t be attributed to performance and aren’t catered for in the remuneration policy as red flags, he says, and this is aggravated in a year with reduced Headline Earnings Per Share (HEPS).

Voting is a mechanism for holding company boards accountable and challenging decisions that seem misaligned with the King Report on Corporate Governance.

Remuneration votes

In South Africa, companies are required to hold two pay-related votes at the AGM: the remuneration policy and the remuneration implementation report. About 70% of Spar shareholders approved the group’s remuneration policy, but only 39% agreed with the implementation of how executives were effectively paid.

He explains that the pay outcomes, as presented in the implementation report, should align with the policy without any material deviation. Importantly, both votes deal with different time periods.

The discrepancy in Spar’s votes indicates that while investors were more comfortable with the pay framework, they were unhappy with how it was applied in practice – finding executive remuneration excessive when compared to the company performance.

Non-binding advisory

Both Spar’s votes for the remuneration policy and the implementation report fall below the 75% threshold of shareholder support required in the JSE Listings Requirements.

In accordance with both King IV and V, the company should ensure ongoing engagement with shareholders to find legitimate areas of concern to be addressed and to disclose the outcomes of those concerns.

“In my experience, this procedure has proven quite effective at identifying and resolving the major areas of dissent between the board and shareholders,” says Harraway.

King IV vs King V

While Spar’s reporting cycle fell under King IV, Harraway believes that applying the new King V wouldn’t change anything materially.

Better engagement

In Spar’s case, the board has asked dissenting shareholders to submit their comments or recommendations, and will follow up with a virtual meeting.

“There will always be divergent views from the shareholder base and so not all conflict can always be fully resolved,“ says Harraway.

“Sometimes the perception of unfair pay is rooted in poorly communicated remuneration decisions. At other times, shareholder discontent on broader governance or management issues can flow over into their remuneration policy or implementation vote.”

Many such clashes could be avoided if boards engaged better with their shareholders, clearly explained the linkage between executive pay and value creation; and listened better to legitimate shareholder concerns – in short, truly applied King’s recommendations.