(Corrects July 16 story to show that dispute relates to non-executive director pay.)
The Johannesburg Stock Exchange may investigate a dispute between Accentuate Ltd. (ACE) management and shareholders who were prevented from voting against non-executive pay at the South African flooring company’s annual meeting.
The group of three investors, who together hold about 25 percent of Accentuate’s stock, have taken legal action against the Johannesburg-based company after attempts to oppose resolutions were thwarted when their votes were declared invalid, Adolf Potgieter, one of the shareholders and former head of Coronation Capital, said by phone. Accentuate Chief Executive Officer Fred Platt said the votes were deemed “faulty” by independent lawyers.
“The JSE is aware of the court proceedings,” the bourse’s Issuer Regulation division said in an e-mailed response to questions. “The JSE will consider investigating this matter once the court proceedings are finalized.”
The shareholders have filed an application in the South Gauteng High Court.
Potgieter’s shareholder group wanted to vote against renumeration for non-executive directors, which needs 75 percent of investor support to be approved. That includes the salary of Ralph Patmore, head independent director who oversees the remuneration committee. They also attempted to block the right for managers to issue shares for cash or to make acquisitions. These “special” resolutions have been put on hold pending the court case.
Potgieter and former managers at Coronation Capital, Cron von Siedel and Mike Patchitt, have been trying to get a seat on Accentuate’s board to gain more influence over management, who they accuse of over-spending company funds on executive salaries and expenses. They also object to the sale of Centurion Glass & Aluminium for 10 million rand in 2011 after the unit was bought for about 75 million rand four years earlier.
Fred Platt and Chief Financial Officer Chris Povall denied any financial mismanagement when contacted by phone.
“Its absolute rubbish,” Povall said. “This thing has been investigated internally, externally, and there’s absolutely zero substance.”
Accentuate shares have declined 32 percent this year, valuing the company at 72 million rand. The stock closed unchanged at 58 cents in Johannesburg, less than half a 12-month peak of 1.33 rand in November. Net income (ACE:US) fell 52 percent to 3.2 million rand in the six months through December, while operating expenses rose 13 percent to 74.5 million rand.
“The economics are tough,” Povall said. “Our margins are under pressure and our operating costs, largely driven by petrochemical issues, are increasing and we’re not able to pass on a lot of those back into the marketplace.”
The shareholders led by Potgieter voted against special resolutions at the previous three annual general meetings, Platt said. Their votes had been referred for independent legal opinion at the request of other investors who didn’t support the group, he said. Momentum Asset Management, which owns a 4 percent stake in Accentuate according to data compiled by Bloomberg, declined to comment on the dispute.
Accentuate Executive Director Donald Platt received a bonus of 654,000 rand ($61,000) in the year through June 2013, about a third of his basic pay of 1.98 million rand, according to the company’s annual report. Fred Platt got 200,000 rand on top of a basic salary of 2.17 million rand.
The Platts and Povall were awarded share options worth a combined 1.6 million rand on June 10, the company said in a statement the following day. Accentuate listed on the JSE in 2006 under the name of Safic Holdings. It re-branded two years later.
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